It’s planned to be the world’s biggest free trade area and Parks Tau, South Africa’s new Minister of Trade, Industry and Competition, has high hopes that it’s going to bring considerable benefits to South Africa.
The Agreement to establish the Africa Continental Free Trade Agreement (AfCFTA) was signed in 2018, but ratification and implementation by African Union members has been slow.
The promise is huge. The agreement aims to stimulate intra-African trade by bringing all 55 member states in the African Union and their 1.3 billion people into one huge free trade area where most tariffs will eventually be reduced to zero. It hopes to lift 30 million people out of extreme poverty and improve the lives of nearly 70 million others by enhancing long-term growth in African countries.
In January this year, South Africa became the first Southern African Customs Union (SACU) country to operationalise the agreement. When President Cyril Ramaphosa presided at a ceremony in Durban to export country’s first preferential trade shipment of goods under AfCTFA, he noted that African countries traded with the world, but had limited trade with each other.
In his speech at the opening of parliament this month, Tau said 12 South African products were now traded on preferential terms under the agreement.
“The AfCFTA is a game-changing initiative to leverage one of the fastest-growing consumer markets in the world, a growing market that is young, tech-savvy, highly educated and conscientious about implementing actionable Pan-Africanism for the twenty-first century.
“With approximately $450 billion in potential income gains from the AfCFTA, a significant portion will arise from improved trade facilitation measures that reduce red tape and simplify customs procedures.”
More than 25% of South African exports went to Africa, he said, and 64% of that trade was manufactured goods.
Tau called on other SACU countries to join in a united effort to promote regional industrialisation. This would leverage South Africa’s trade with Africa which had increased from just over R343 billion in 2019 to just under R547 billion in 2023.
