Rwandan President Paul Kagame. Picture: AFP PHOTO/ZACHARIAS ABUBEKER
Rwandan President Paul Kagame. Picture: AFP PHOTO/ZACHARIAS ABUBEKER

Kigali — Africa’s biggest economy signalled its opposition to a continental free trade zone, saying that it would defend its own businesses and industry.

The $3-trillion continental free trade zone encompassing 1.2-billion people was accepted by 44 countries on Wednesday, but Nigeria and SA, the second biggest economy, did not sign up, diminishing the plan’s chance of success.

President Cyril Ramaphosa said SA would sign up once domestic legal requirements had been satisfied.

However, his Nigerian counterpart, former military ruler Muhammadu Buhari, took a defiantly protectionist stance.

“We will not agree to anything that will undermine local manufacturers and entrepre-neurs, or that may lead to Nigeria becoming a dumping ground for finished goods,” Buhari’s official Twitter account said.

The AU started talks in 2015 to establish a 55-nation bloc that would be the biggest in the world, in a bid to increase intraregional trade, which sits at 15% of Africa’s total commerce.

Rwandan President Paul Kagame, host of an AU summit to conclude the initial negotiations, declared the meeting a success after 44 African nations signed up to establish the free trade bloc within 18 months.

Those out of the bloc are Botswana, Lesotho, Namibia, Zambia, Burundi, Eritrea, Benin, Sierra Leone and Guinea Bissau.

“It would have been great if the two biggest economies on the continent, Nigeria and SA, had signed, but the most important is that the rest of the continent is sending a right message to these two biggest economies that we are moving ahead without you,” said Michael Kottoh, an analyst at Confidential Strategies in Ghana.

The project needed a minimum of 22 countries signing up to get off the ground and Kagame hailed the effort so far.

“What is at stake is the dignity and wellbeing of Africa’s farmers, workers and entrepre-neurs,” he said.

AU trade commissioner Albert Muchanga put a positive spin on the absence of the top two African economies, telling Reuters they would soon join in. “They are still doing national-level consultations and so when they finish they will be able to come on board,” he said.

Economists point to Africa’s low level of intraregional trade as one of the reasons for the continent’s enduring poverty and lack of a strong manufacturing base.

It is blamed on a host of factors, from colonialism, to high internal tariffs to poor road and rail links, excessive border bureaucracy and petty corruption at frontier checkpoints.

The relatively small size of many African markets — only Nigeria and Ethiopia have populations estimated at 100-million people or more — also inhibits private sector investment.

Africa already has an alphabet soup of competing and overlapping trade zones — Ecowas in the west, EAC in the east, Sadc in the south and Comesa in the east and south — although only the EAC, driven mainly by Kenya, has made significant progress towards a common market in goods and services.

Analysts said governments needed to do more to ensure goods and people flowed freely across borders. “If they just sign the agreement without opening the borders, without getting rid of non-tariff barriers and if they don’t work on free movement of people, it is not going to work,” Kottoh said.

Business people said the current trading set-up in Africa forced them to look outside the continent for manufactured goods.

Reuters

 

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