Outline

  1. Why the CFTA?
  2. Background
  3. The Road Map for Establishment of the CFTA
  4. Objectives of the CFTA
  5. Negotiating Structure and Stakeholders Participation
  6. Implications of MRTAs
  7. The Scope of the CFTA
  8. Challenges
  9. Policy Recommendations

Why The CFTA?

  • The CFTA is critical NOT ONLY for its potential benefits, BUT ALSO to mitigate the costs associated with inaction.

Why The CFTA? (Cont’d…)

  • Africa is the world’s poorest and most underdeveloped continent with a continental GDP that accounts for just 2.4% of global GDP.
  • Africa has approximately 30% of the earth’s remaining mineral resources.
  • The Continent has the largest reserves of precious metals with over 40% of the gold reserves, over 60% of cobalt, and 90% of platinum reserves.

Why The CFTA? (Cont’d…) Intra- African trade is about 12%.

  • In North America it is 40%, and 63% between countries in Western Europe, 30% in ASEAN;
  • It is estimated that 40% of intra-African trade is informal trade
  • 46% of goods traded between countries are manufactured goods such as garments, leather goods, etc.
  • Africa is the world’s second largest continent

Key to improving low intra-African Trade

The CFTA will bring 54 countries with combined population of over 1 billion people and combined GDP of USD3.4 trillion.

Why The CFTA? (Cont’d…)

Developments in Africa

Africa on the rise, and must rise with its people (70% of cross

border traders are women)

Demographic dividend (Africa is the Second most populous continent with about 1.1 Billion people. About 70% of Africans under 30 years of age and over half are females).

Over 55% of Africa’s labour force is working in food production with vast areas of arable and pastoral lands supporting agricultural economies.

Almost 40% of adults in Africa are illiterate – two-thirds are women.

Why The CFTA? (Cont’d…)

Africa’s biggest economies trading on MFN basis

Better terms when exporting overseas under such programs as EPAs, AGOA, GSP

Africa remains 3% of global trade and DDA at the WTO,

AGOA, EPAs have not enabled Africa’s successful integration into the Global Economy

Europe and USA are major destination for African products, Asia and China are becoming more important;

Why The CFTA? (Cont’d…)

Positioning Africa to benefit:

  • Many of Africa’s 54 countries are small, with populations of fewer than 20 million and economies of less than $10 billion.
  • National markets are therefore too small to justify investments, since both adequate supply of inputs and sufficient client bases (demand) remain too expensive or out of reach.

CFTA as a tool for Structural Transformation

  • Dynamic impact of increased trade among African countries for industrial development, better infrastructure connectivity, economies of scale, enhanced competitiveness and structural transformation.

Why The CFTA? (Cont’d…)

Achieving the African Economic Community under the Abuja Treaty of 1991

  • The Treaty provides for establishment of African Economic Community through the following stages:
  • Strengthening of Regional Economic Communities;
  • Establishment of a Continental Customs Union;
  • Implementation of Common Sector Policies; and
  • Establishment of a Continental Common Market and ultimately African Economic Community.

Background: The Continental Free Trade Area (CFTA)

  • The Continental Free Trade Area (CFTA) initiative is in line with the Abuja Treaty (signed on 3rd June 1991) – the Treaty Establishing the African Economic Community.
  • That’s why the January 2012 Summit of Heads of States and Government endorsed the Action Plan on Boosting Intra African Trade (BIAT) and decided on the establishment of a Continental Free Trade Area by an indicative date of 2017.

Background: CFTA Framework

June 2015 Summit Launched the Negotiations

Adopted Decision and Declaration launching the negotiations

  • Endorsed the following documents:
  • The Negotiating Principles for the CFTA
  • Institutional Arrangements for the CFTA negotiations
  • The Terms of Reference for the CFTA-NF
  • The Indicative Roadmap for the CFTA negotiations.

CFTA Road Map (Timelines)

  • The Assembly 18th Ordinary Summit in January 2012, decided that the CFTA should be operationalized by the indicative date of 2017, with the following milestones:
    • Finalization of the EAC- COMESA-SADC Tripartite FTA initiative by 2014;
  • The four other AU-recognized RECS (ECOWAS, CEN-SAD, ECCAS and UMA), to negotiate a parallel FTA – should they wish to do so, by 2014. They could also choose to join the CFTA directly
  • Consolidation of the Tripartite and other regional FTAs into a Continental Free Trade Area (CFTA) initiative between 2015 and 2016;

Establishment of the Continental Free Trade Area (CFTA) by 2017 with the option to review the target date according to progress made.

Presented by Prudence Sebahizi Lead Technical Advisor on the CFTA

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