Dlamini-Zuma sees hope in the CFTA
On 26 January, African Union Commission Chairperson Nkosazana Dlamini-Zuma called for Africans to “revive and strengthen the spirit of pan-Africanism, unity, and solidarity.” Zuma sees potential moves towards protectionism in the West as “treacherous global waters” in which Africa’s only hope “is to honor the decision to commence its own Continental Free Trade Area in 2017”, she said. Some say that Dlamini-Zuma would be a strong candidate for president of South Africa (EZA) (CAFRX) (TRAMX).
What is the CFTA?
The Continental Free Trade Area or CFTA intends to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Customs Union among 54 African countries (GAF). These countries together represent a combined population of more than one billion people and a combined gross domestic product of more than $3.4 trillion. The CFTA is expected to be adopted by African Heads of States and Government in December 2017.
According to the African Development Bank, intra-Africa trade remains low compared to intra-regional trade in other parts of the world. An UNCTAD (United Nations Conference on Trade and Development) forecast indicates that intra-Africa trade could increase to 15.5% of its total exports by 2020, as opposed to the current 10.2%. And, with enhanced trade facilitation measures; it has the capacity to increase to 21.9%.
Could the CFTA be a much needed boon to Africa’s largest economy?
Improved trade should help expedite economic development and inclusive growth across the African continent. The pact should also lead to more jobs and improved public infrastructure. For Nigeria (NGE) especially, a boost in intra-Africa trade could be critical to the economy’s recovery. Low commodity prices have deeply hurt the country’s fortunes. Trade could be that new frontier that helps Nigeria begin to pave the path back to economic prosperity.