Johannesburg, 2 June 2019 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the official beginning of the African Continental Free Trade Area (AfCFTA) on 30 May 2019, which provides access to a continent-wide market of 1.2 billion people worth $2.5 trillion.
SEIFSA Chief Economist Michael Ade said the deal, which effectively places Africa as the world’s largest free trade zone by population since the 1995 creation of the World Trade Organisation (WTO), has remarkable potential for intra-continental trade.
“This is a huge milestone in achieving African economic integration. SEIFSA commends the 24 countries that had ratified the Agreement by 30 May, thus bringing it into force,” said Dr Ade.
The Agreement’s operational phase will be launched on July 7 at an African Union summit in Niger, with some minor issues – including rules of origin – still to be resolved. The Agreement which will effectively breathe life to the largest trading bloc in the world, enables the creation of a single continental market for goods and services, with free and unfettered movement of business people and investments. It cuts duties on 90% of goods and is expected to boost regional and international trade and to improve on the proportion of trade by African nations with continental neighbours.
Dr Ade said the AfCFTA presents a unique opportunity for South African-based companies to trade with those of other regions, such as in West and Central Africa where there is a dearth of trade agreements. He encouraged companies in the metals and engineering sector to take advantage of the Agreement to boost trade further North and East of the continent.
“Due to challenges principally caused by poor logistics and infrastructure, most businesses had limited their trading opportunities to the southern part of the continent. The Agreement provides a scope for more improved trade in line with the African Union’s Agenda 2063 – and this is good news,” he said.
Dr Ade cautioned that rather than limiting themselves to producing a particular set of goods, local companies should conduct market research, move with the times and produce goods currently needed by other African countries. He said it was very important for trade among Africans to be expanded, since uncertainties in international trade increase the premium on regional intra-African trade.
“The AfCFTA proves that Africa has learnt from the experience of East Asia and Latin America to build productive trading capacities through regional value chains. This will help build collectively the competitiveness of African products – including raw materials – internally and internationally. By trading with other African member states, South Africa will strengthen its position and improve gains from international trade,” Dr Ade said.
However, Dr Ade also urged African leaders to do away with remaining challenges that pose a threat to intra-African trade. He said non-tariff barriers such as the plethora of documentation needed for cross-border trade transactions were even bigger impediments to intra-African trade.
Issued by:
Ollie Madlala
Communications Manager
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za