African Leaders Meet to Push Forward Free-Trade Deal

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Officials are gathering in Niger’s capital this weekend for an African Union summit that begins the “operational phase” of a long-sought continental free trade zone.

Some 50 heads of state were to arrive in Niamey on Friday, a day behind their foreign ministers, for Sunday’s summit on the African Continental Free Trade Area (AfCFTA). By integrating economies and reducing trade barriers such as tariffs, the pact aims to increase employment prospects, living standards and opportunities for the continent’s 1.2 billion people and to make Africans more competitive regionally and globally.

FILE – Nigerian President Muhammadu Buhari is sworn in for a second four-year term in Africa’s most populous nation in Abuja, Nigeria, May 29, 2019.

The trade deal got a boost earlier this week when Nigeria’s president, Muhammadu Buhari, committed to signing the deal this weekend. The

ECOWAS Executive Director, Mohamed Ibn Chambas

Regional common currency

ECOWAS plans to introduce the ECO currency in 2020, though its debut has been delayed repeatedly since 2000.

The African free trade zone has been under discussion since 2002, with a draft deal signed in early 2018. In May, it surpassed a threshold of ratification by at least 22 member countries’ legislatures.

“And now the process of free trade can start,” said Ibrahima Kane, a Senegal-based senior program adviser with the Open Society Foundations.

A date of next July 1 has been put forward for trading to begin, but “saying that this treaty will be operational in 2020 is not realistic,” said Kane, who focuses on African Union matters. “People are still negotiating on a number of critical issues,” including rules of origin, which determine whether a manufactured product gets taxed or not.

Challenges, disparities

Kane cited other challenges, including disparities among African countries’ connectivity, infrastructure, customs and regulatory enforcement, payment systems and more. 

“Many things will be done online,” he said. “How many countries have official borders? How many will be equipped with this kind of infrastructure? … African countries need to agree on standards. It’s a long, long, long process.”

AU and national leaders also are expected to decide Sunday where to locate the trade zone’s headquarters. Five countries are in the running for headquarters: Egypt, eSwatini, Ghana, Kenya and Madagascar. As Reuters points out, a country’s selection will bring it more prominence.

The pact is intended to improve circumstances for the whole AU bloc. Currently, intra-African trade accounts for 16% of exports, up from 5% in 1980 but “low compared to intra-regional trade in Europe and Asia,” according to the African Export-Import Bank. 

Tariffs on intra-African trade average 6.1%, more than those levied on non-African countries, the French news agency AFP reported. It also cited an International Monetary Fund report that said “improving trade logistics, such as customs services, and addressing poor infrastructure could be up to four times more effective in boosting trade than tariff reductions.”

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