Commentary

The Tripartite Free Trade Area Decision Deserves More Credit Than It Is Getting

On June 10th three African Regional Economic Communities (RECs) have finally achieved what Cecil Rhodes never did by truly connecting Cape to Cairo. Rather than by railway lines and exploitation they have done this by forming the Tripartite Free Trade Area (TFTA).

The Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) represent 26 countries with 625 million people and more than 50% of the continent’s GDP.

It’s a remarkable step towards the Pan-African dreams of the founding figures of modern African states even though ratification and implementation will probably take years.

However, the global media’s commentary on this development has been pretty critical. Hilary Matfess writes on Quartz Africa that the TFTA is “bound to disappoint” like the other RECs have in the past. The BBC’s Lerato Mbele is a bit more optimistic, but points out that “despite so many regional bodies, trade has not benefitted”.

Admittedly, intra-continental trade has been quite stable at around 12% of total trade compared to Europe or Asia where it reaches up to 60%. Yet the pessimists are making two age-old mistakes in reporting on African economic development: they don’t contextualize and they are not specific enough.

The context of Africa’s under-performance in intra-regional trade is still deeply connected to colonial pasts and the dominance of neoliberal development economics.

Transport is a major hurdle to trade on the continent as the existing infrastructure has been designed by colonialists and western development consultants after independence to bring raw materials to the coast and ship them to Europe. For example, nobody ever built a decent road link between the two major coastal cities of the East African Community, Dar es Salaam and Mombasa. The five EAC countries estimate that they will need between USD 68 and USD 100 billion to reach their infrastructure development goals for 2025.

Furthermore, Matfess sees a problem in a missing comparative advantage between commodity-dominated economies. This economic structure is a legacy from colonial times and international trade regimes. Exports of raw goods met much lower duties in the rest of the world than manufactured products. Value-addition was punished. Luckily, this structure is changing. In the EAC services make up already 41% of total exports and the trend is pointing upward across most of the continent (see WTO Database).

Moreover, the critiques are throwing around continental statistics, while the TFTA is composed of less than half the continents’ countries and three very different Regional Economic Communities. Good old “Africa is a country” reporting…

Have a look at the numbers for the TFTA members: The share of intra-regional exports in SADC increased from the famous 12% in 2000 to 17% in 2013. COMESA was at a much worse 4.8% in 2000, which is not surprising when you see that membership stretches from Libya to Swaziland. Yet, COMESA’s intra-exports eightfolded in total numbers and climbed to 9.4% of total exports in 2013. The EAC was the most successful rising from 17.5% to 19.5% over the same period. (All numbers from UNCTAD).

The latter in particular should be applauded – this progress has come since the EAC’s relatively recent creation in 1999. Burundi, Kenya, Rwanda, Tanzania and Uganda have managed to not only establish a Customs Union and a Common Market, but they have also ratified a Monetary Union Protocol, improved movement of workers and are working closely together in political affairs in general.

Of course regional integration in Africa has its troubles and I have written about it myself. Similarly, the TFTA roll-out will not go smoothly and should not be seen as the panacea for intra-African trade.

You can certainly be critical of the RECs and their performance so far, but do it in a precise and contextualized manner.

For a more nuanced analysis of the TFTA, check out this interview with Razia Khan, head of Africa economic research at Standard Chartered.

Standard

One thought on “The Tripartite Free Trade Area Decision Deserves More Credit Than It Is Getting

  1. Pingback: Course Reviews: Master of Public Policy at the Hertie School of Governance | Development Intern

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