By: Anthony Sedzro
Intra-African trade is set to increase sharply if a Continental Free Trade Area (CFTA) agreement, an initiative of the African Union, is implemented. Implementation of the CFTA will see trade among Africa’s 55 countries increase by a dramatic 52 percent, or US$35 billion in value terms by the year 2022.
Ghana’s Minister for Trade and Industry, Alan Kyerematen made the disclosure in a speech read on his behalf by a deputy Trade Minister, Carlos Ahenkorah, at the Crystal Ball Africa 2018 conference held at the Labadi Beach Hotel on 10th January, 2018. The Crystal Ball Africa conference is an annual event organised by AB & David, a pan-African business law firm headquartered in Accra. The theme of the conference was “Expanding Businesses and Trade across Africa – Opportunities Arising Out of the Continental Free Trade Agreement (CFTA) and Growing Intra-Africa Trade.”
Intra-African trade currently stands at about 15 percent compared to trade between Africa and Europe which hovers at 40 percent. However, according to the Trade Minister, this is set to change.
“The United Nations Economic Commission for Africa (UNECA) has projected that a successful implementation of the African Continental Free Trade Area will increase intra-African trade by as much as US$35 billion per year or 52 percent above the baseline by 2022,” Kyerematen, who formerly worked for the UNECA in Ethiopia, stated.
He went on: “UNECA projects imports from outside the continent to decrease by as much as US10 billion per year while agricultural and industrial exports were estimated to increase by US$4 billion and US$21 billion above the baseline respectively.”
“Thus, the share of intra-African trade is projected to double over the base line to 22 percent of total trade by 2022,” the Trade Minister added.
Intra-African trade is hampered by customs trade barriers, language barriers, poor transport infrastructure, visa restrictions, multiple trade agreements, and so on. However, the new CFTA accord will see to the creation of a new Customs Union on the continent which will ease these barriers, according to Kyerematen.
“It is also remarkable to note that the creation of the single continental market for goods and services with free movement of persons, businesspeople and investments will help bring closer a continental customs union and African common market,” he asserted.
He said the CFTA has become more urgent now than ever and free trade has become a tool for deepening trade across the world as result of globalisation. Free trade agreements have immense potential for growth and for lifting people out of poverty, the Minister stated.
The 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union (AU), held in Addis Ababa, Ethiopia in January 2012, adopted a decision to establish a Continental Free Trade Area (CFTA) by an indicative date of 2017. The Heads of State will hold a meeting in March 2018 to ratify the agreement for implementation.
The Continental Free Trade Agreement (CFTA) is an Africa-wide free trade agreement (FTA) designed to boost intra-African trade and pave the way for the future establishment of a continental customs union.
If implemented, the CFTA will cover a market of 1.2 billion people with a combined Gross Domestic Product (GDP) of US$2.2 trillion. With the continent’s economy expected to grow to US$29 trillion by 2050, the CFTA may evolve to cover a market that is larger than the North American Free Trade Area (NAFTA), according to UNECA.
In her opening remarks, Isabel Boaten, the Managing Partner of AB & David Ghana, organisers of the conference, said Africa has great potential and AB & David sees crystal clear that Africa is a place of opportunities. Since 2003, the law firm has committed itself to making business people see the opportunities embedded in the policies formulated by governments.
She explained that the annual Crystal Ball Africa event provides a platform to share, learn and gain strategic insight into business opportunities available in Africa.
This year’s Crystal Ball event is the 5th in the annual series. Highlights of the program include discussions that centred on Post-Mugabe Zimbabwe, Beyond Local Content, the Combined Effect of the EPA, CFTA & China Belt & Road Initiative, the Impact of Crypto-Currency on continental trade, among others.
Also, six key issues that will be explored to guide participants’ business decision include; Donald Trump’s administration and Russia investigations; South Africa’s Jacob Zuma’s decision to step down or not before the elections as well as whether Nigeria’s economy will recover from current challenges.
Notable speakers at the Crystal Ball Africa this year include Tony Oteng Gyasi – CEO of Tropical Cables and Conductor Limited (Ghana); David Ofosu-Dorte – Pan-Africa Business Lawyer (Ghana); Richard Mbaiwa (CEO, Zimbabwe Investment Authority); Olumide Akpata (Business Lawyer, Nigeria).
Others are Hon. Ibrahim Awal (Minister for Business Development), Reginald Yofi Grant (CEO, GIPC), Michael Kottoh (Djondo Fellowship); Seth Twum-Akwaboah (AGI) and others.