South Africa shows its commitment to promoting intra-African trade

On 6 December 2018, the South African Parliament assured the 54-member states of the African Union that it is committed to promoting intra-African trade which will be based on equal partnerships and mutual opportunities. The country becomes one of the recent African states to ratify the agreement establishing the African Continental Free Trade Area.

The country’s position on the continent is perceived to be one of leadership through its economic dominance, thus the approval by Parliament of the transcontinental free trade area agreement will inspire countries which are part of its trade regimes (such as the Southern African Customs Union and Southern African Development Community countries) to ratify the agreement. At present, SADC countries such as Seychelles have already begun domestic consultations with key stakeholders such as the private sector on the agreement.

To date, 49 countries out of 55 have signed the agreement for the establishment of the African Continental Free Trade Area. And 18 countries out of the 49 have either deposited their instruments of ratification with the African Union Commission chairperson or have had parliamentary approval and will deposit their instruments in 2019. The 15 countries are as follows, according to regional or geographic representation (not Regional Economic Communities membership representation):

Southern Africa: (1) eSwatini*, (2) Namibia, (3) South Africa*, (4) the Democratic Republic of Congo,

East Africa: (5) Djibouti, (6) Kenya*, (7) Rwanda*, and (8) Uganda*,

West Africa: (9) Cote D’Ivoire, (10) Ghana*, (11) Guinea, (12) Mali, (13) Mauritania; (14) Senegal, (15) Sierra Leone; (16) Togo;

Central Africa: (17) Chad* and (18) Niger*

North Africa: None has ratified, and only some are signatories of, the Kigali Declaration on the establishment of the African Continental Free Trade Area.

(*Denotes countries that have deposited their instruments of ratification with the African Union Commission chairperson.)

For the African Continental Free Trade Area to be implemented 22 ratifications are required, and the African Union Commission is optimistic that this will be attained by March. The achievement of above 80% turnout in the first year of signing ratifications signifies an important milestone towards realising the objective of creating one African market.

Despite a plethora of scholarly literature on the potential benefits of the African Continental Free Trade Area, it is too early to evaluate whether the agreement will be feasible or if it offers the economic prospects the African Union Commission claims it will yield considering the current transcontinental infrastructural position. Worthy of note is that, at present, there is a “basket” of several multilateral, regional and bilateral trade agreements in sub-Saharan Africa, which have lowered trade tariffs among countries and regions. However, due to overlapping membership, some of these agreements are not yielding the envisioned economic and trade-related-outcomes.

Overlapping membership refers to countries having membership in two or more regional trade agreements with concurrent goals of trade and economic liberalisation. This a prevalent phenomenon in Africa, which is affecting the implementation of rules of origin, which are legal mechanisms that regional trade agreements articulate to enhance intra-regional trade agreement trade. The African Continental Free Trade Area “contains a rendezvous clause in which the state parties undertake to continue negotiations in the outstanding areas”.

There is an incorporated schedule for negotiations on tariffs, rules of origins and the priority services sectors, which are yet to be agreed upon and approved by member states. It appears that for the foreseeable future, the regional economic communities will continue to implement their own regional agendas.

Theoretically, the African Continental Free Trade Area has the potential not only to increase intra-African trade but to act as a catalyst for economic growth. If fully implemented the African Continental Free Trade Area will create a trade bloc that is estimated “to bring together a market of 1.2 billion people, the population on the entire continent, with a combined gross domestic product of more than $2-trillion”.

Furthermore, if fully implemented, the United Nations Economic Commission for Africa points out that intra-African trade could increase by 52% by 2022, in comparison to the 16% in 2014, according to the African Development Bank.

So far, three African countries have shown no commitment: Eritrea, Guinea-Bissau and Nigeria. The decision by the continent’s biggest economy to show no commitment yet is due to intimidation from trade and labour unions. This widely held claim was confirmed by a tweet from President Muhammadu Buhari:

“We will not agree to anything that will undermine local manufacturers and entrepreneurs, or that may lead to #Nigeria becoming a dumping ground for finished goods.”

Is Nigeria still interested in fulfilling its regional hegemonic leadership role in West Africa if it is not leading by example, by endorsing the agreement? There is no doubt that there will be winners and losers in what is being referred to as the largest free trade agreement since the formation of the World Trade Organisation 1995. Unquestionably, any agreement of this magnitude — that would accelerate intra-African trade among 55-member countries, with lower to no tariffs, and seeks to reduce more or less all trade barriers — would favour countries that already have a higher share of Africa’s exports and larger populations.

However, Economic Commission for Africa’s executive secretary, Vera Songwe, assures that “our analysis shows that the African Continental Free Trade Area is win-win for all countries, big and small, agricultural and industrial, landlocked and coastal, in regard to both increases in exports and overall welfare or GDP”.

Nevertheless, Nigeria, being the largest economy and the most populous African country, needs to be involved in this to make it worthwhile and successful. This also applies to Egypt, which is among the continent’s economic giants.

The Pan-African University is a project initiated by the African Union Commission in 2008, to provide postgraduate training and a platform for emerging scholars across Africa to research on issues geared towards “the development of a prosperous, integrated and peaceful Africa”. This is a scholarly community where at least one African country had a representative. From September 2018 to September 2019, I am privileged to represent South Africa, in my personal capacity.

Thus, I have been able to collaborate with African scholars both Anglo and Francophone, who came from different disciplinary academic backgrounds. In addition to being intellectually stretched amid such a diverse community, I had an opportunity to hear what other Africans think of South Africa’s foreign policy towards Africa. It came to my attention that African intellectuals think that with our current international profile we can do more for the African Union and its member states.

They enthusiastically communicated that we should not defer Mbeki’s African Renaissance dream and we should take inspiration from his era and have a strong presence at the African Union. In addition, we should acknowledge that South Africa is the frontier of the North-South divide and provides the gateway into Africa. Many of my colleagues argued that South Africa should use its BRICS, G20 and United Nations Security Council membership (2019-2020) to champion the advancement of inclusive socio-economic development according to the aspirations from Agenda 2063.

Many intellectuals concur with Rwandan President Paul Kagame that the AU is “a dysfunctional organisation in which member states see a limited value, global partners find little credibility and our citizens have no trust”. They add that South Africa could transform its political and economic diplomacy for the AU’s global partners to find more credibility, thus achieving the realisation of aspiration 7 of Agenda 2063:

“Africa as a strong, united, resilient and influential global player and partner.”

For me, at this platform, discussing issues from how to combat xenophobia, terrorism, civil wars to corruption was also a time for me to ask myself some hard questions: How can South Africa ensure that it conducts its foreign policy towards Africa in non-threatening and non-confrontational way as well as ensuring that its national interests are aligned with promoting intra-African trade, peace, human security and good governance through collaboration with other African Union member states as equals, regardless of its economic and military power

The prevailing narrative is that South Africa is self-seeking (for example, our hegemonic domination in SADC) and does not want to create or promote opportunities for its neighbouring countries.

It is very refreshing to see South Africa has finally articulated its commitment through approving the agreement for the establishment of the African Continental Free Trade Area.

The country will continue to champion the socio-economic transformation of the continent. These baby steps of ratification will prepare us for a huge leap of faith towards liberalising transcontinental trade. While Nigeria is studying the African Continental Free Trade Area to ensure all concerns and anxieties are addressed, we shall wait in optimism.

Last, I also hope the other four ratifications will take place in early 2019 to make up the 22 required for the agreement to enter into force. Despite the continuous attention of the media on war, terrorism and conflict, Africa is experiencing some positives which capture a new agenda, emphasising the importance for increasing intra-African trade.

The Commissioner for Trade and Industry of the African Union, Ambassador Albert M Muchanga, articulately mentions this agenda:

“We are saying goodbye to the era of small, isolated and fragmented small markets. We are clearly signalling that Africa is not for isolationism or nationalism. Our message to ourselves and to the rest of the world is that we pool our independence and sovereignty to create a higher value of inter-dependency anchored on creating one African Market.” DM