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African Union launches bid for world's largest free trade area
Addis Ababa, Ethiopia
AFRICA'S leaders will gather in Rwanda on Wednesday to launch what they say will be the world's largest free trade area but Nigeria has already pulled out, highlighting the challenge in getting the continent to sign up.
Establishing the African Continental Free Trade Area (CFTA) with 55 African Union (AU) members having a cumulative GDP of US$2.5 trillion is one of the bloc's flagship projects.
However, Muhammadu Buhari, president of one of Africa's largest markets Nigeria, this week cancelled plans to attend the Kigali launch and called for more consultations after business leaders objected to joining the world's biggest free trade area in terms of countries.
"The signature of the CFTA is something that makes Africa look good on paper, but for implementation it's going to have a lot of hiccups," said Sola Afolabi, a Nigeria-based international trade consultant.
Some 27 heads of state are expected to attend the Kigali meeting, but it is unclear who will sign on to the CFTA right away.
AU trade and industry commissioner Albert M Muchanga said Africa's fledgling industries and growing middle class would benefit from the CFTA's removal of tariffs.
Currently, African countries only do about 16 per cent of their business with each other.
"If we remove customs and duties by 2022, the level of intra-African trade will increase by 60 per cent, which is very, very significant," Mr Muchanga said. "Eventually, we are hoping that all the African Union states will be parties to the Continental Free Trade Area," he added.
With underdeveloped service and industrial sectors across the continent, African countries have for decades seen their fortunes rise and fall with the prices of exported commodities such as oil, cocoa and gold.
Landry Signe, a development expert with Stanford University in the United States, said the agreement could help local industries, while giving African countries a unified platform to negotiate trade deals with wealthier nations.
"With the CFTA, the manufacturing sector would be much more diversified, as the market would not be a few million people, but potentially 1.2 billion people," he said. AFP