THE launch of the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC) Free Trade Area is a powerful signal that Africa is serious about its economic integration, says Trade and Industry Minister Rob Davies. The launch of the COMESA-EAC-SADC Tripartite Free Trade Area (TFTA) – which follows on four years of negotiations – creates a larger market of 26 countries, a combined population of up to 625 million people and a total gross domestic product (GDP) of $1.6 trillion.
The main benefit of the TFTA, is a larger, integrated, and growing regional market that can increase the interest of foreign investment and provide a basis for enhanced intra-African trade.
Davies highlighted that the underlying rationale for African economic integration is that African markets are small by global standards, and too small to support economic diversification and industrialisation of the individual countries.
“The establishment of the TFTA is not only a political vision but makes business sense. The creation of larger markets with greater critical mass will not only enhance the African investment proposition, it is also the only way Africa will compete effectively in the global economy. Regional integration is therefore critical to accelerated, inclusive and sustainable growth in Africa,” said Davies.
Adding that the Tripartite Initiative is based on a development integration model.
“The market integration pillar aims to address trade barriers and is to be complemented by cooperation on industrial development; and coordinated infrastructure development. This is essential to enhance productive capacity and the development of regional value-chains as well as promote inter-connectivity and reduce costs of doing business in eastern and southern Africa,” explains Davies.
The TFTA was launched at the 3rd Summit of the Tripartite in Sharm el-Sheikh, Egypt. The negotiations towards the TFTA were launched in Johannesburg on 11 June 2011.
The launch of the TFTA will be followed by the launch of negotiations on the establishment of a Continental FTA (CFTA) at the 25th African Union Summit which took place in South Africa. Once established, the CFTA will offer a market of over one billion people and a GDP of $2 trillion.
The African market is crucial for South Africa’s industrialisation and job creation efforts as one of the key destinations for the country’s value-added exports.
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