2020, year of the African free trade area

Two years after its creation, the African free trade area should enter into force in 2020. Details were brought to the conclusion of the African Union summit, which ended on Monday February 10 in Addis Abeba, after several days of debate between the members. Now, Zleca has its leader, the South African Wamkele Mene, chosen from 120 candidates, and a precise timetable has been announced. At 43, this economist knows the file well since he was until now the chief negotiator of South Africa for Zleca and already represented his country in the negotiating bodies of the World Trade Organization .

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Africans hurry

“We must build a market in which African companies must be the main players. The time of colonialism and imperialism is over, ”launched, delighted, Cyril Ramaphosa, the South African president, who took the head of the African Union for a year. The Zleca secretariat will be located in Accra, Ghana. And several operational instruments have been discussed, such as the rules of origin which govern the conditions under which a product or service can be exchanged duty-free throughout the region, but also tariff concessions: an information portal will be put online. to inform in real time about the applicable tariffs, etc. What about the private sector? According to ITC, more than 40% of African companies identify the lack of access to information as a factor affecting the business environment across the continent. Zleca intends to increase the number of information points by setting up a dedicated trade observatory. “From a private sector perspective, the number one priority is to increase investment and production to supply the large market of 1.27 billion people with a growing middle class. This may require entering into partnerships or joint ventures for business, “said African Union Commissioner for Trade and Industry, Albert Mudenda Muchanga.

The continental free trade zone in Africa (Zleca), officially launched in July 2019 in Niamey, Niger, with the aim of starting the market from 1st July 2020, was signed by all the countries of Africa, except Eritrea. In total, 27 of them have already ratified it. Their ambition: to eliminate customs duties on around 90% of traded goods, reduce non-tariff barriers and liberalize services between them. This project, which should bring intra-African trade to 23% by 2023, must be operational from 1st next July. Before that, an exceptional AU summit on Zleca is planned for May in South Africa. Another meeting will follow with an official launch in Chad in July.

Huge challenges

However, for many, African integration must go through an endogenous development of the continent’s economies. In addition to customs barriers and those related to standards, companies operating on the continent are confronted daily with infrastructure barriers. This agreement could attract more foreign investment by also facilitating the creation of regional supply chains, which have been important engines of development in other regions of the world. “We will guide the implementation of the Presidential Infrastructure Initiative so that priority projects with the greatest impact act as catalysts for Zleca,” said the South African president. “We need to level the playing field for African companies so that they are able to operate in a large-scale market unhindered by regulatory fragmentation. This is an integral part of rebalancing international trade relations, ”explained Cyril Ramaphosa to the AU. He also pledged to promote the potential of Zleca during his year as president of the AU, which will give momentum to the continental free trade initiative. In a recent report, the IMF calculated that eliminating tariffs on 90% of existing flows (whichever is more ambitious) would increase regional trade by about 16% ($ 16 billion). Another contradiction: the stated desire to create a free trade area and at the same time the application by certain economies of the continent of tariff barriers or outright closure of borders for others. Many observers have raised the issue of closing Nigerian land borders since August 2019. According to President Buhari, the main reason for the closure was to limit the smuggling of goods such as rice and textiles to stimulate domestic production.

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