22 October 2019

Note: This article first appeared on thesouthafrican.com

Deputy President David Mabuza updated Members of Parliament (MPs) on the progress achieved in the implementation of the African Continental Free Trade Agreement (AfCFTA). The update was done at the National Assembly in Parliament, Cape Town.

The purpose of the AfCFTA

Mabuza’s address was done at 14:00 on Tuesday, 22 October 2019. The AfCFTA was aimed at fast-tracking “the agenda of continental integration and create one large market as opposed to current fragmented markets found at country level.”

The AfCFTA would combine market integration with infrastructure development, and industrial development to boost intra-Africa trade and sustainable economic growth.

South Africa working to build constructive partnerships

The African Union (AU) created the agreement which was signed on by 54 of its 55 member states in Kigali, Rwanda on 21 March 2018. The agreement “initially requires members to remove tariffs from 90% of goods, allowing free access to commodities, goods, and services across the continent.”

The deputy president explained how the foreign policy’s “promotion of regional integration is an important economic and political goal of our government.” Mabuza revealed in parliament that South Africa was working to establish constructive partnerships with other African countries.

He also added that the government had “promoted mutually-beneficial economic relations that are based on the ideal of regional integration.”

Elements that hinder African integration

The deputy president explained how a number of challenges had hindered the integration namely:

  • Undiversified commodity-led growth paths
  • Small and fragmented markets
  • Infrastructure deficiencies such as energy, telecommunications, poor connectivity as far as roads, rail and ports is concerned, which all have negative impact on trade facilitation
  • Lack of technological infrastructure and Research and Development
  • Instability linked to armed conflicts and poor political governance
  • Inadequate human capital and ‘brain drain’
  • Dependence of certain countries to Official Development Assistance from donor countries

Which areas can the AfCFTA benefit

Mabuza explained:

“The region has trade and investment potential in areas of agriculture and agro-processing, infrastructure development in terms of roads, rail, ports, telecommunications, water purification and bulk supply, energy, logistics, and Information Communication Technologies, to name a few. If these are fully exploited, they will contribute to establishing appropriate interconnections that would enhance intra-regional trade.”

 David Mabuza, Deputy President of South Africa
The 54 Member States are expected to eliminate restrictive measures that affect trade in services. This would be done through the reduction and removal of market access barriers.

AfCFTA opens SA to expanision

The deputy president added:

“Currently, South Africa’s primary export destination in Africa is the SADC region due to the advantage of proximity to countries in this region. This Free Trade Area presents us with an opportunity to further grow our trade volumes and expansion to new markets.”

 David Mabuza, Deputy President of South Africa

Mabuza revealed that trade volumes with Nigeria were currently around R56 billion, Kenya is R9.1 billion, Cameroon is currently around R630 million, and Egypt is sitting at around R4.1 billion.

He also shared that the Free Trade Area also provided South Africa with alternative markets for the export of value added goods and services.

Agreement will grow economic development

The deputy president explained how important the agreement was saying:

“This Free Trade Area is an important initiative in accelerating industrialization and economic development across the African continent. It aims to build an integrated market in Africa that will see a market of over 1 billion people with a combined GDP of approximately 3.3 trillion US Dollars.”

 David Mabuza, Deputy President of South Africa

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