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.


Renault board to meet on Thursday for Ghosn replacement

Updated 12 min 14 sec ago
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Renault board to meet on Thursday for Ghosn replacement

  • Carlos Ghosn has already been stripped of his positions as chairman of Nissan and Mitsubishi
  • The French government is Renault’s biggest shareholder, with a stake of more than 15 percent

PARIS: French carmaker Renault said Tuesday that it would hold a board meeting Thursday to name a replacement for its boss Carlos Ghosn, who remains in custody in Japan over alleged financial misconduct.
Sources close to the discussions said that the company would put forward Thierry Bollore to replace Ghosn as chief executive and Michelin chief Jean-Dominique Senard as board chairman. Ghosn currently holds both roles.
Ghosn has already been stripped of his positions as chairman of Nissan and Mitsubishi in the wake of the allegations.
The French government, Renault’s biggest shareholder with a stake of more than 15 percent, is particularly keen to see the company appoint a new leader.
Ghosn, who was arrested on November 19, is set to remain behind bars for the forseeable future after a Tokyo court denied him bail on Tuesday.
Prosecutors suspect he under-declared his income in official statements to Nissan shareholders between 2010 and 2015 to the tune of some five billion yen ($46 million), apparently in an attempt to avoid accusations he was overpaid.
A separate but similar charge is that he continued to do this between 2015 and 2018, under-reporting his income by a further four billion yen.
He also faces a complex charge of seeking to shift personal investment losses onto Nissan’s books and transferring company funds to a Saudi contact who allegedly stumped up collateral for him.