44 African nations sign pact establishing free trade area

The African Heads of States and Governments pose during African Union (AU) Summit for the agreement to establish the African Continental Free Trade Area in Kigali, Rwanda, on March 21, 2018. (AFP)
Updated 21 March 2018
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44 African nations sign pact establishing free trade area

KIGALI, Rwanda: Forty-four African countries have signed an agreement establishing a free trade area seen as vital to the continent’s economic development, the head of the African Union said Wednesday.
The creation of a free trade area — billed as the world’s largest in terms of participating countries — comes after two years of negotiations, and is one of the AU’s flagship projects for greater African integration.
“The agreement establishing the CFTA (African Continental Free Trade Area) was signed by 44 countries,” said Moussa Faki Mahamat, chairman of the AU commission.
However, the agreement will still have to be ratified at a national level, and is only due to come into force in 180 days.
Nigeria is notably absent from the signatories after President Muhammadu Buhari pulled out of this week’s launch in Rwanda saying he needed more time for consultations at home.
One of Africa’s largest markets, Nigeria hesitated after objections from business leaders and unions — a sign that getting the deal through scores of national parliaments may face several hurdles.
“Some countries have reservations and have not finalized their national consultations. But we shall have another summit in Mauritania in July where we expect countries with reservations to also sign,” said Albert Muchanga, the AU Commissioner for Trade and Industry.
However other economic powerhouses South Africa, Kenya, Morocco, Egypt, Ethiopia and Algeria — known for strict protectionist policies restricting imports and exports — did sign the deal.
If all 55 African Union members eventually sign up, it will create a bloc with a cumulative GDP of $2.5 trillion (2 trillion euros) and cover a market of 1.2 billion people.
Currently, African countries only do about 16 percent of their business with each other, the smallest amount of intra-regional trade compared to Latin America, Asia, North America and Europe.
And with average tariffs of 6.1 percent, businesses currently pay higher tariffs when they export within Africa than when they export outside it, according to the AU.
“If we remove customs and duties by 2022, the level of intra-African trade will increase by 60 percent, which is very, very significant,” Muchanga told AFP in an interview before the summit.
Proponents of the deal argue that African economies on their own are too small to support economic diversification and industrialization on their own and will benefit from having a unified platform to negotiate trade deals with wealthier nations.
The “CFTA will make Africa one of the largest economies in the world and enhance its capacity to interact on equal terms with other international economic blocs,” said Faki in a speech before the signing ceremony.
“The world is changing, and changing at a great speed. International competition is fierce. It leaves no room for the weak.”
However, critics highlight a dearth of roads and other infrastructure linking different African nations, as well as the fact that many countries do not manufacture goods their neighbors may want to import, as challenges to the deal.
Sola Afolabi, a Nigeria-based international trade consultant, told AFP the fact already-existing regional trade blocs were not working, should be a red flag.
“If there is no reward for compliance and there is no punishment for non-compliance, then it is going to be a very nice agreement without any teeth or any legs,” he said.
Faki acknowledged that Africans “have seen so many proclamations remain a dead letter, so many commitments without practical execution that they have come to doubt the strength of our commitment.”
He urged for a break in this trend, calling for a deal that “must confound those who, outside Africa, continue to think — with barely-concealed condescension — that our decisions will never materialize.”
The CFTA is a key part of the AU’s long-term development plan Agenda 2063, which calls for easing trade and travel across the continent.
At its most recent summit in Ethiopia in January, AU member states agreed to a common air transport market that could drive down airfares, as well as plans for visa-free travel for Africans across the continent.
Also on Wednesday, 27 countries signed the protocol agreeing to the free movement of persons across the continent.


Going, going, gone: A slice of Europe on Dubai’s doorstep

Updated 17 August 2018
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Going, going, gone: A slice of Europe on Dubai’s doorstep

DUBAI: Billionaire investors from Saudi Arabia are snapping up a slice of Europe — minutes from Dubai’s coast — as work on a luxurious man-made archipelago gathers pace.
On the emirate’s “The World” archipelago, the Heart of Europe project provides a series of island destinations, made up of opulent palaces, island villas and 13 luxury hotels on six small islands. Each offers a different aspect of European life and aims to bring European hospitality “with a Maldivian twist” to the Middle East’s Arabian Sea.
According to its developer, Joseph Kleindienst, chairman of the Dubai property developer Kleindienst Group, wealthy investors across the Kingdom are among the most prominent buyers of the multimillion-dollar properties being developed on the island, with almost a quarter of investments to date being made by Saudi nationals.
“We have a very good interest from Saudis in the Heart of Europe project,” said Kleindienst, speaking to Arab News during a private tour of Sweden Island. “Here in Sweden Island, soon you will find very, very famous Saudi names. It is not for us to disclose these names, but later on, as the development grows, you will meet very interesting Saudis here.”
The Heart of Europe is the first big project to go ahead as part of The World project, a 60-square-kilometer archipelago of more than 200 islands laid out in the shape of a world map, which was created from millions of tons of sand and rock. Currently, Lebanon Island is the only one open to the public; it operates The World Island Beach Club.
Construction of the Heart of Europe project was due to begin in November 2008 but was delayed by the global financial crisis. Development finally began in 2014. The project’s value has grown from an initial Dh1.5 billion ($408 million) equity undertaking by the Kleindienst Group to Dh5 billion ($1.36 billion) after sales.
On Monday thousands of workers at Heart of Europe were busy across the islands striving to get the project ready for the completion deadline of 2020, ahead of Dubai’s Expo; with an initial focus on Germany Island and Sweden Island.
The Heart of Europe has 10 beach palaces on Sweden, 32 beach villas on Germany and 131 “Floating Seahorse” villas, marketed as the world’s “first luxury underwater living experience.”
Kleindienst expects that all of the homes for sale across the Heart of Europe project will be handed over by the end of this year.
In total, 4,000 residential and hotel units will eventually be available across the project, about 1,000 of which have already been bought by investors, Kleindienst said.
Besides handing over residences to owners by the end of the year, The Heart of Europe is due to have the first of its planned hotel “soft openings,” at the Portofino Hotel in Italy, in December.
Lying five kilometers (3.1 miles) off mainland Dubai, the Heart of Europe will feature Italian, Spanish, Swedish, Swiss and German architecture as well as landscaped gardens and streets that will, in some cases, feature artificial snow, due to climate control technology. And, for those who miss Europe’s winter drizzle, some streets will also feature artificial rain.
Sweden will feature 10 Scandinavian-style villas. This week, the Kleindienst Group unveiled the first completed six-floor Sweden Beach Palace, and invited Arab News for a viewing.
With a price tag of Dh100million, the villa comes with Bentley Home interiors, seven bedrooms, a fitness center, an underground “snow room” that can be set as low as minus 5C, a Swedish massage room, an entertainment room and an observation deck — designed to mimic the upturned hull of a Viking ship — with 360-degree views of the Arabian Gulf.
Each property has its own private section of beach. The palaces also own a piece of the marine area plot, including a private coral reef.
Of the 10 for sale, three have already been bought by investors based in Saudi Arabia, said Kleindienst.
Saudis, along with other wealthy Middle Eastern residents, are an important segment of the investors the Kleindienst Group hopes to attract. “It is an excellent product for investors from Saudi Arabia because we are selling this ‘second-home’ concept here in the Heart of Europe.
“People from Saudi Arabia can travel to Dubai and enjoy their time in the Heart of Europe. And when they are not here, we hope they can rent their homes out and produce an income from the property,” he said.
Heart of Europe properties are not for people to live in 365 days a year, but for the uber-rich looking to snap up a second home in the Middle East, with a unique setting.
Kleindienst said that the project is Dubai’s first purpose-built luxury area offering UAE residents a holiday property in their own country, rather than in the Maldives, Mauritius or Seychelles.
“The second-home market is a new concept for Dubai,” he said, adding that while New York has places such as The Hamptons and many cities in Europe have countryside and seaside getaways, Dubai has lacked a luxury weekender destination.
“The Heart of Europe is a unique and ambitious project aiming to develop Dubai’s luxury freehold second-home market in an idyllic island location,” he said. “Our journey to date has taken us to the unveiling of the Sweden Beach Palaces, one of the most luxurious freehold second homes in the UAE. Our vision is turning into reality.”
Aside from Sweden Island, Saudis are also snapping up the Floating Seahorse vessels, which come with a slightly less eye-watering price tag of Dh16million, said Kleindienst. Of the 131 for sale, 60 have already been bought, he said. Figures from April show that about 40 percent of the buyers are from the Kingdom.
On the tour, Arab News saw a completed prototype. The bespoke one, two or three-bed floating homes have bathrooms and bedrooms below sea level so owners have only a pane of glass separating them from hundreds of fish and an abundance of marine life as they sleep and bathe.
Kleindienst hopes the Heart of Europe project will be the catalyst for world-breaking firsts, including a record he aims to break this year.
The soft opening of the 488-room Portofino Hotel, located on the Main Europe Island, will take place on the last quarter of 2018, despite only breaking ground on the construction site this year.
“No one has broken ground on a hotel, then completed it the same year,” he said. “We want to show that it is possible. That anything is possible. That there is the ability to build a hotel in a year on an island.”