Weaker African countries to benefit from free trade area — expert

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By Daniel Gumm

Weaker countries that fear being overwhelmed in a huge African free trade area will benefit from it in the long term, a development expert has said, as leaders of 26 governments met to try to accelerate the creation of the zone.

In the short term, “you have to acknowledge the fact that within an FTA there are winners and losers,” Kennedy Mbekeani, an African Development Bank official, has said. But he said as the zone helps boost the region’s economies, smaller members will benefit and develop sectors where they have competitive advantage.

Host South Africa is the continent’s economic powerhouse, but has high levels of unemployment and poverty. President Jacob Zuma, in his address to the summit, said the zone will help work together to alleviate poverty and build industrial capacity.

The zone brings together members of the Southern African Development Community, the Common Market for Eastern and Southern Africa and the East African Community. Officials envision members lobbying together for aid and investment, presenting coherent and integrated plans. Plans for the zone include joint projects to improve roads and rail networks and power supply. Foreign companies also will see opportunity in a larger market — EU and British observers attended summit.

Multinationals can send their goods duty free across African borders if they set up factories — creating jobs for Africans — within the zone. Mbekeani said the rules, yet to be worked out, should allow non-African companies to set up factories in the zone to assemble products that might rely on inputs from elsewhere.

Mbekeani said it is hard to predict when the zone might resemble the European Union, with its single central bank and a currency used across borders. He pointed out that the EU has been a work in progress since the 1950s, and still encounters problems. One lesson Africa can learn from Europe, he said, is “not to move too fast.”

“They should not be defensive, they should go in with an open mind,” said Mbekeani, recently appointed by his bank to help find ways to support the zone that stretches from Egypt down to South Africa and from Angola across to Madagascar. The bank would like to see a continentwide free trade zone, and sees the south and east bloc as an important step in that direction.

In the early days, Mbekeani said, some countries will want to establish tariff and other barriers. He said barriers should be temporary, and while they are in place, countries should be strengthening their economies.

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