Rob Davies pledges full support for Africa’s new trade deal

SA fully supported the African Continental Free Trade Area (AfCFTA) and did not sign the agreement about it only for technical reasons, Trade and Industry Minister Rob Davies said on Monday.

There are prescribed domestic processes for the signing of international agreements.

“SA is very much part of this process. We are not holding back. We don’t have reservations or differences,” Davies said. He noted that SA had actively participated in the preparation and negotiations of the AfCFTA, which was launched in Kigali, Rwanda, on March 21.

Davies said SA had no real problems with the content of the AfCFTA, although it still had to be fleshed out.

SA has signed a declaration committing itself to the process to establish the AfCFTA, the largest in the world, incorporating 1-billion people. The AfCFTA will remove barriers to trade such as tariffs and import duties and allow the free flow of goods and services between member states. It is regarded as the foundation for the continent’s economic development.

The agreement still has to be ratified by each of the signatories and is due to come into force in six months. Ten AU member countries, including Nigeria, refused to sign the deal.

“The AfCFTA is an economic imperative to address the challenge of small and fragmented markets. It is also being established at a time when the multilateral system is facing challenges,” Davies said.

He said it was essential to create a market that was big enough to support deep industrialisation and the diversification of African countries’ economies. The combined nominal GDP of the African continent is $3.3-trillion.

The continent was critically important for SA, Davies said. In 2017 the country exported R23.5bn to African countries and imported R8.6bn from them. A significant part of the exports were value-added products.

A risk posed by the AfCFTA was that it could become a conduit for imports from other parts of the world without significant value addition by African countries, Davies said. It would undermine its intention to support local production and industrialisation. This threat could be dealt with by the rules of origin in the AfCFTA rules when these were developed.