African Continental Free Trade Area agreement crucial to the realisation of the AU Agenda 2063

07 Nov 2019 in Speeches

The following speech will be delivered in Parliament’s debate on

Advancing the African Union Agenda 2063 today and is under embargo until delivery.

Honourable Speaker,

The ratification of the African Continental Free Trade Area (AfCFTA) agreement by 27 member states is a victory for the market-based economy and is crucial to the

realisation of the African Union Agenda 2063.

The AfCFTA will consist of a market of 1.2 billion people and a Gross Domestic

Product (GDP) of $2.5 billion across 55 member states. This makes the agreement

the largest free trade area post the formation of the World Trade Organisation (WTO).

For far too long, African countries have closed themselves off to their African

neighbours – the time has come for this to change

This is supported by United Nations Economic Commission for Africa who state that

“businesses face higher tariffs when they export within Africa than when they export outside it”. However, the AfCFTA will go a long way in ameliorating this in the shortterm and vastly improving our continent’s fortunes in the long-term.

Moreover, it is argued that this agreement has the potential to improve intra-African

trade by up to 52.3% through the elimination of import duties and the minimization of non-tariff barriers. This would provide a marked improvement for Intra-African trade which only accounted for 16% of Africa’s total exports in 2017.

As one of the largest and most diversified economies on the continent, South Africa,

is in pole position to benefit from the AfCFTA. However, we should not be under the

assumption that continental trade policy is able to compensate for poor domestic policy choices.

This means that a renewed focus on solving the energy crisis, shutting down talk of

nationalisation and a clear action to trim the public wage bill are crucial. Moreover,

there needs to be an investment injection to infrastructure and logistics routes that

allow for seamless supply chain management.

According to the World Bank’s Ease of Doing Business Rankings, South Africa, places

at 145 out 190 countries in terms of ‘Trading Across Borders’.

This poses a particular challenge in the context of the AfCFTA by virtue of the fact that these indicators are linked to the cost, time and cumbersome compliance items related to exports.

Earlier in the year, President Ramaphosa appointed a working group in collaboration with the World Bank to address these poor rankings. In lieu of this, the DA will be watching with a keen eye to see whether or not structural reforms are effected to improve this ranking and respond accordingly.

As one of the largest economies in Africa it is totally unacceptable that we find

ourselves in the position we do!

As the AfCFTA negotiations are still ongoing and member states’ are in process of

deciding on product-specific rules of origin, the DA urges decision makers to craft rules that prevent ‘fronting’ by extra-continental trading partners.

Furthermore, we call for the negotiations on investment, competition and intellectual property to be expedited and, that decisions made are true to market-based principles including the primacy of private property, fair competition and economic growth.

The AfCFTA provides an opportunity for South Africa to reestablish itself as a leader

on the African continent – we cannot allow this opportunity to be missed.