There are signs of progress on the long-awaited Tripartite Free Trade Agreement (T-FTA), which has been under discussion between the Common Market of Eastern and Southern Africa, the East African Community and the Southern African Development Community since 2011.
In November, Cabinet officially approved South Africa’s T-FTA position, while Egypt’s Industry and Foreign Trade Minister, Mounir Fakhry Abdel Nou, told Reuters that an agreement incorporating 27 African countries into a single trade bloc would be signed in Cairo in December. This statement was confirmed by the South African government, which said that the T-FTA would be launched at the Third Summit of the Tripartite Heads of State.
The countries involved in the so-called ‘Cape to Cairo’ FTA have a combined gross domestic product of $1.2-trillion and some 626-million citizens, representing more than half of Africa’s overall population.
The South African government views the T-FTA as key to raising intra-African trade and investment levels, while improving prospects of aligning the South African economy with some of the world’s fastest-growing economies – the International Monetary Fund forecasts that sub-Saharan Africa will remain the second-fastest-growing region in the world, behind emerging and developing Asia.
But South Africa, which is Africa’s second-largest economy, was battling to recover from the global economic crisis and to grow at a pace fast enough to deal with its serious unemployment, poverty and inequality problems.
The National Treasury expected the South African economy to expand by only 1.4% this year, by 2.5% in 2015, 2.8% in 2016 and by 3% in 2017 – all rates of growth that fell well short of the 5% target outlined in the National Development Plan.
“The Tripartite initiative is a key African-led project aimed at promoting economies of scale, enabling competitiveness and diversification, fostering regional value-chains, intraregional trade and investment, and cross-border infrastructure,” Cabinet said in a statement.
The T-FTA was also being viewed as a possible precursor to a continentwide FTA, which was being punted by the African Union.
South Africa was negotiating its participation as part of the Southern African Customs Union, which typically entered such trade deals as a single entity.
In parallel, the African Development Bank (AfDB) announced that its board of executive directors had approved a new Regional Integration Policy and Strategy for the period 2014 to 2023.
It said the strategy would focus on creating larger, more attractive markets, linking landlocked countries to international markets and supporting intra-African trade to foster the continent’s development.
The AfDB plan also paid more attention to the so-called ‘soft infrastructure’ issues, such as trade facilitation, policy reform and regional harmonisation of policies, as well as regulations related to infrastructure, trade and investment.
The strategy would prioritise two complementary thematic areas for support, namely regional infrastructure and enhanced industrialisation and trade. From 2015, the bank would prepare a new generation of regional-integration strategy papers, which would outline specific projects and resource requirements.