Cautious optimism as Africa opens single market

Rwanda's President Paul Kagame at the African Continental Free Trade Area Business Forum in Kigali on March 20, 2018. PHOTO | PRESIDENCY 

In Summary

• Rwanda’s President Paul Kagame, the AU chairman driving reforms at the continental bloc, speaking at the opening ceremony on Tuesday, said the trade treaty provides Africa with an opportunity to break trade barriers and reap the benefits of integration.
• Several countries have expressed fear that a free trade area, which allows free movement of labour, would disrupt local markets, jobs and revenues.
• The agreement aims to boost intra-Africa trade by making Africa a single market with a population of 1.2 billion people and cumulated GDP of more than $3.4 billion.

By IVAN R. MUGISHA
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By EDMUND KAGIRE
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As Africa moves towards creating the world’s largest free trade area with the signing of the
Continental Free Trade Area (CFTA) treaty on Wednesday, some countries already have reservations about the whole idea.

Nigeria, the continent's largest economy, has pulled out with President Muhammadu Buhari saying the country is holding domestic consultations on the deal before signing it - just like Tanzania, which has hinted that it may not sign the agreement until parliament discusses it. On its part, Uganda is not comfortable with some tariffs.

“Tanzania has the political will to sign (the deal), but we need to first subject the treaty to parliament and get what our population thinks,” Tanzania’s Foreign Affairs Minister, Augustine Mahiga, told The EastAfrican.

Of Africa's 54 countries, only about 20 Heads of State are expected to sign the CFTA at the extraordinary African Union summit in Kigali, Rwanda. The agreement aims to boost intra-African trade by making Africa - with a population of 1.2 billion people and cumulated GDP of more than $3.4 billion - a single market.

Speaking at the opening ceremony on Tuesday, Rwanda’s President Paul Kagame, the man driving reforms at the continental bloc as the chairman, said the trade treaty provides Africa with an opportunity to break down trade barriers and reap the benefits of integration.

“The stakes are enormous not only for Africa, but also for the entire global economy, to which Africa will contribute an ever-greater share in the decades ahead,” said President Kagame.

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“Increasing intra-African trade, however, does not mean doing less business with the rest of the world. On the contrary, as we trade more among ourselves, African firms will become bigger, more specialised, and more competitive internationally,” he added.

Fears

Several countries have expressed fear that a free trade area, which allows free movement of labour, would disrupt local markets, jobs and revenues.

Addressing concerns over the reluctance to open up domestic markets, President Kagame urged “fair but also expeditious” consultations to iron out issues.

“Let’s also be realistic. We cannot take the Continental Free Trade Area for granted. After it is signed, there will still be challenges.

“Implementation will mean reform of procedures and rules at the national level. This won’t happen overnight. It will be a process requiring dialogue and flexibility,” he said.

Albert Muchanga, the AU Commissioner for Trade and Industry, urged countries that are yet to complete national consultations to do so, saying they will have another chance of signing at the next AU summit.

“When the negotiations started in 2015, a key principle agreed upon was that those ready to sign should go ahead. A lot of countries have not yet finalised national consultations and others are directly talking to parliamentarians and they require time to finalise,” Mr Muchanga said.

“But signing (the deal) is the first thing that has to happen. Just after this, on Wednesday, we shall have another summit in Mauritania, and we shall expect those member states with reservations to have finalised the process.”

Rwanda's State Minister of Foreign Affairs, Olivier Nduhungirehe, on Monday warned that the “effectiveness of this trade area will be difficult if countries continue to have reservations.”

“It is unfortunate that some African countries have waited this long until close to the signing to start talking about their reservations to the CFTA,” said Donald Kaberuka, one of the AU experts in President Kagame’s reform team. He is the AU High Representative for the Peace Fund.

Ratification

At a meeting of Foreign Affairs ministers on Monday, some countries raised concerns over the number of signatures needed to ratify the treaty. Some, like Tanzania, wanted the number increased from 15 to 22 countries.

“If you need a reasonable threshold, it cannot be only 15 countries; otherwise Ecowas (West African bloc), which is made up of 15 countries, can sign it alone. This would not be representative. If we move it to at least 22 signatures to have it ratified then it can be taken seriously,” Tanzania’s Foreign Affairs Minister, Augustine Mahiga, said.

Heads of State who confirmed attendance for the AU summit are Kenya, Somalia, Djibouti, South Africa, DR Congo, Zimbabwe and Ghana. Others are Niger, Chad, Congo Brazzaville, Togo, Mauritania, Gabon, Guinea, Senegal, Mali, Madagascar, Guinea Bissau, Mozambique, Burkina Faso, Central African Republic, Libya, Comoros, Sahrawi, Lesotho, Gambia, and Angola.

Those sending delegates are Tanzania, Uganda, Egypt, Cote d'Ivoire, Seychelles, Morocco, Swaziland, Benin, Malawi, Mauritius, Botswana, Cape Verde, Namibia, Sao Tome, Tunisia, South Sudan and Eritrea.