The Tripartite Free Trade Area to be established by 2015 will enable greater intra-African trade, writes Maite Nkoana-Mashabane.
At their recent summit in Lilongwe, Malawi, the heads of state and government of the Southern African Development Community (SADC) paid particular attention to the urgent need to improve trade among member states of the 15-nation regional body.
Because of the global economic downturn, the economies of some of the region's traditional trading partners, especially those in the Eurozone, are in recession, which negatively affects trade and investment. It is therefore essential that the region finds ways to expand intra-SADC trade.
At the summit in Lilongwe, the leaders received a report from the Ministerial Task Force on Regional Economic Integration, outlining progress made on the SADC regional economic integration agenda. The leaders reiterated their commitment to the establishment of the Tripartite Free Trade Area, encompassing the Common Market for East and Southern Africa (Comesa),the East African Community (ECA) and the SADC.
Through the ambitious Tripartite Free Trade Area, it is expected that a free trade area will be established by 2015, combining the markets of 26 countries with a combined population of nearly 600-million people and a combined GDP of one trillion US dollars.
Of significance, this will form the basis for an Africa-wide Free Trade Area, which could create a single market worth $2.6-trillion. This will enable us to realise the objective of greater intra-African trade.
Though nominally modest, Standard Bank confirmed that intra-African trade is certainly ascending. According to the bank's estimates, intra-African trade amounted to roughly $90-billion in 2011, a substantial fivefold leap from $17-billion in 2001.
Promotion of investments
In addition, the Southern African Development Bank expects that informal cross-border trade accounts for between 30-40% of total trade within the SADC region.
In these processes, South Africa is playing its part in the promotion of investments within the continent by South African private companies and state-owned enterprises.
South Africa's export profile within the SADC region, according to Standard Bank, is clearly displayed: of the top five countries in SADC in terms of imports from the rest of Africa as a share of total imports from the world, four obtain the vast majority of these regional goods from South Africa (80% of Namibia's imports from the rest of Africa, as well as 90% of Botswana's; 65% of Zambia's; and 80% of Zimbabwe's originate in South Africa). A similar ratio is also true for Mozambique (90% of rest of Africa imports come from South Africa) and Malawi (60%).
While we appreciate that our intra-African trade is still marginal, the SADC summit also acknowledged that under-developed production structures and inadequate infrastructure remain real barriers to greater intra-African trade and regional economic integration.
There is a clear need to focus on rebuilding our productive capacities and attain competitiveness as part of our strategy to boost intra-regional trade, contribute to economic diversification, enhance exports and create employment.
Realising the potential for development in SADC requires that we address inadequate infrastructure which is necessary to access markets. It is estimated that poor infrastructure reduces productivity of companies by 40%.
Priority infrastructure project
In this regard, the summit reviewed the status of the implementation of the Regional Infrastructure Development Master Plan (RIDMP) adopted in 2012.
An infrastructure summit held in Mozambique in June 2013 sought to woo potential investors, funders and key international cooperating partners; to raise awareness and brief the investment community on a range of priority infrastructure projects; and to facilitate direct consultations between potential investors and national project promoters.
At the national level, South Africa has singled out investment in infrastructure development as a catalyst for economic growth and job creation.
President Zuma said at the recent BRICS Business Council that South Africa "is on course to spend in excess of R4-trillion in the coming years, focusing on rail, roads, energy, water, sanitation and the communication sectors throughout the country."
President Zuma also said: "Africa is poised to make further progress given the focus on improving systems and policies."
SADC has come up with what we call "Vision 2050", which is a new development blue-print that is expected to shape Southern Africa's regional integration agenda until 2050.
The SADC Vision 2050 aims to provide a long-term vision for SADC as the region seeks to position itself in a context of emerging global and continental issues such as climate change, United Nations reform and increasing global financial instability.
Overall, the member states of SADC, including South Africa, are determined to invest robustly in infrastructure development so as to enable a more convenient movement and goods and people. This is sure to boost intra-regional trade.
Our leaders acknowledge that economic development cannot take place where there is no peace and stability; hence the simultaneous focus at all summits and meetings on matters relating to the maintenance of peace and stability in the region.
Maite Nkoana-Mashabane is South Africa's minister of international relations and cooperation.