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Africa free trade deal, a potential loud sounding nothing- Analysts

23/03/2018
by Kelvin Chiringa
Business

Namibia, with other African heads of state have signed the first ever continental free trade deal this week at an AU Summit in Rwanda, but analysts are already frowning upon chances of it being successfully implemented.

Nigeria, one of the biggest African oil economies could not bring itself to sign the framework for the establishment of the African Continental Free Trade Area (ACFTA) as protests against it by labour unions flared up as they fear that it has a potential to harm their local economy.

President Muhammadu Buhari reportedly had to cancel his trip to the extra-ordinary summit “to allow more time for input from Nigerian stakeholders,” said Nigerian foreign ministry spokesperson, Elias-Fatile in a written statement.

Information coming from the trade ministry has it that minister Tjekero Tweya is representing Namibia and when approached by this publication for a comment on the latest development, the office of the permanent secretary said it would only issue a statement upon his return.

Taking to Facebook, deputy PS, Michael Humavindu celebrated the signing of the deal as the “Best gift on our Independence Day,” also saying, “Hope Nigeria will sign on eventually.”

He was also not reachable on his mobile phone when approached for a comment.

However, critics have shot at the ACFTA as one of the good blueprints which will at the end of the day remain stuck in the pages.

“African Heads of State have in the past signed or adopted numerous good blue prints in the social, economic and political spheres. But translating them into realities is another matter. In most cases, the implementation leaves a lot to be desired. This means seeing is believing,” says visiting professor at the university of Cape Town, Henning Melber.

He adds that African countries are still predominantly embedded in a global economic system, for which they export primary goods, from mining, fisheries to agriculture.

“This is a resource extraction based economy, dependent and vulnerable because of the global market. Continental free trade would be promoted most by the exchange of value added, manufactured goods. But in the past we have seen a process of de-industrialisation in most African countries (including South Africa).”

“Hence the export of raw material remains the major contribution to trade. This makes it an uphill battle to generate a meaningful inner-continental free market, which benefits the trading partners. The intention is good, but the obstacles are enormous. I am afraid we do not yet see the light at the end of the tunnel, as long as African economies remain within a vision circle of global market dependency where others outside of the continent play the tune. SADC is a case in point,” says the professor.

Pressed on what potential niches Namibia is poised to get a foot hold on if the deal is to be eventually successful, economist at the University of Namibia (UNAM) Roman Grynberg says there are very view options available. 

“It’s a step in the right direction if they do it yes. The question is whether they are likely to do it,” he says.

He adds that beneath the veneer of the excitement of an eventual African single market, most African leaders, “don’t believe in freeing up trade.”

“They sign agreements to open up trade between African countries and then go home and create monopolies like the chicken monopoly. They say one thing and they do not really believe it. And the reason that they don’t believe it is the only thing that creates jobs at home is protection for their own people,” he explains. 

However, the danger in the deal is in that most African countries more or less produce similar goods, hence Melber sees there being little to exchange for mutual benefits. 

“What is needed is a diversification of economies, which then would complement each other in terms of goods produced. But in SADC, the SACU regulations as well as the dominance by South Africa through protection clauses when it comes to industrial production are already a hindrance. It would require that individual countries would abandon giving their interests absolute priority. Instead, a common aspiration would be required, to the benefit of all,” says the professor.