A free trade area requires one fundamental thing – trade
The launch of the Tripartite Free Trade Area after 16 member states signed the text, is a momentous accomplishment. One day, when the intended free trade area has become fact, those then enjoying the benefits of inter-continental trade, will hail their forefathers for their insight and vision to have started the project in 2015.
As I stated last week, the free trade area is a noble idea, however, it is only an idea. One can not talk of unrestricted trade aposteriori when there is no trade apriori. And this is what I argued, – there is a reason why intra-African trade is so exceedingly modest. It is because there are very few linkages that can carry the trade (goods), and very limited institutional and statutory convergence that can support trade (services), across the territories and the jurisdictions. Africa as a whole is fragmented, under-capitalised and sorely lacking in infrastructure that connects us to our neighbours in any meaningful way, at least in such a way to serve even a small fraction of the envisaged common market of 620 million people.
As such, the major obstacles are infrastructural and it will require massive (in the superlative) capital investment over decades, to change conditions.
In the 12 days since the Tripartite Free Trade Area was launched, more expert eyes had opportunity to peruse the text of the agreement. This brought to light some very significant legal and statutory challenges, in addition to my perceived infrastructure deficit, that will all take time to unravel, and eventually be agreed upon. The obstructions are legio.
One such obstacle in particular is that South Africa, who has not signed the text, may block the way for other Southern African Customs Union members, which include Namibia, to join the tripartite free trade area. And it has been suggested that this could feature on the agenda when the SACU members sit down to renegotiate the revenue sharing formula, something on which South Africa is very keen. There is much domestic pressure in SA to renegotiate the formula, especially now that she has managed herself into economic stagnation, and people are asking why they must pay for both Nkandla and for their neighbour’s over-dependence on so-called SACU transfers. For instance, if I read the stats correctly, Lesotho would not have existed were it not for money from the revenue pool.
But by this I do no imply that it is a waste of time to pursue a free trade agreement. I believe every rational African realises the necessity for such an instrument. It is only the execution timeline that I am concerned about. Getting a sufficient number of participating member states to ratify the agreement will be an arduous task in itself. Then getting all those members to make the legal adjustments in their own jurisdictions to give effect to the tripartite agreement, will be an even more monumental task. And then to arrange access to sufficient capital to start the infrastructure explosion we need, will take an unimaginably brave effort. I think we are looking at thirty years but I realise half a century is probably more accurate. However, we had to start somewhere and that point in history was a fortnight ago.
For the past ten years I have often been asked my opinion on intra-African trade seeing that it is punted so often as the escape route to lead African countries onto the high-road scenario. My position remains the same. Africa, the continent, will develop in three clearly distinguishable geographic regions, west, south and east. Linkages at the seams will develop slowly, and those countries which do not fit in comfortably in any particular region, like Angola, the DRC, the Central African Republic, and the tiny spots on lake Victoria, Rwanda and Burundi, will battle to find more than one significant trading partner. Within West Africa, southern Africa and eastern Africa, trade linkages will be formed or strengthened as the infrastructure linkages develop. Only many years later when within each of these three regions, the constituent countries register significant intra-jurisdictional trade, will these (natural) blocks be able to form workable agreements with each other, first only for limited trade, then for normalised trade, and only after that, for free trade.
Integrating West Africa is a momentous task. Accomplishing the same in eastern Africa is equally fraught. Only in southern Africa will it be easier and speedier, for obvious historical reasons and for the fact that limited trade already exists. But this, in turn, depends on the definition of who is included in the label “Southern Africa”, and who is not.
We can build a direct road link to Lubumbashe in the Congo to bring copper blister to Tsumeb, but at that point in future when we are ready to enter into a free trade agreement with the Congo, who knows whether Lubumbashe will still exist. Or whether we shall still need copper for industry.