The government is pushing for faster implementation of a continentwide free trade agreement which it says is central to the country’s economic recovery.
As the Covid-19 pandemic continues to wreak havoc, SA’s GDP for 2020 is projected to plummet about 8% and recent Stats SA figures show that the country has shed 2.2-million jobs during the second quarter.
In 2018 SA joined other countries in signing the African Continental Free Trade Area (AfCFTA) agreement that aims to create a single market for goods and services, with free movement of businesspeople and investments. With about 1.2-billion people on the continent, the AfCFTA is set to create one of the largest free-trade markets in the world. But its implementation has been delayed by the Covid-19 crisis. It was due to come into force in July, but this is now expected in early 2021.
The SA government sees the agreement as a potential game changer for the local economy, providing a huge market for local goods and services. Exports to the rest of the continent already account for about 250,000 SA jobs, the department of trade, industry & competition said recently.
“We are working very hard to meet the January 1 deadline for launching the African continental free trade area,” director-general Lionel October said on Monday.
“This is an important part of the industrialisation and localisation leg of the president’s recovery plan: the removal of trade barriers [to] massively expand the market and boost growth.”
October said the agreement has the support of both business and labour at Nedlac, and stakeholders are busy identifying export opportunities.
Trade, industry & competition minister Ebrahim Patel, who heads the bureau of African ministers tasked with implementation of the agreement, has been pushing for the prompt commencement of negotiations to ensure that it is ready to be implemented by January 2020, October said.
SA’s parliament ratified the agreement in 2018. So far 29 other countries out of the 55 AU states have done the same. Eritrea is the only AU member state that has not signed up for the AfCFTA, with the Horn of Africa nation stating that it is advocating subregional integration rather than such continental aspirations.
October said all countries have agreed to the timetable and negotiations are now focused on finalising the tariff schedule and rules of origin or the criteria used to determine the national source of a product.
The AfCFTA has a secretariat based in Accra, Ghana. Led by the secretary-general, SA-born Wamkele Mene, it is tasked with providing technical support for and the general management and implementation of the AfCFTA agreement.
Last week Mene said the agreement will boost intra-Africa trade by $35bn, increase value-chain development across all sectors, enhance the competitiveness of industry and reduce trade deficits.
Intra-African trade remains very low compared to other large regions in the world such as the EU and Asia.
Mene said the AfCFTA is working with partners to develop a vibrant programme for small and medium-sized enterprises (SMEs), with a particular focus on women and youth. It is estimated that informal traders and SMEs undertake 30%-40% of cross-border trade in Africa.
The harmonisation and co-ordination of customs operations and border agencies co-operation is a priority for the AfCFTA, he said. It will lay the foundation for a continental customs union and at the same time promote industrial development and sustainable social and economic growth in Africa.
UN Economic Commission of Africa regional integration and trade division director Stephen Karingi said the AfCFTA will be important in driving Africa’s economic growth.
“Intra-African investments in particular can be conducive to structural transformation and regional integration in that they can underpin African trade and its industrial contents, enable economies of scale and can facilitate entry into regional and global value chains,” he said.
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