Africa’s biggest trading bloc on the cards

IT SEEMS that Africa’s
biggest trading bloc could be
on the cards.
The European Union (EU)
has just agreed to a regional
finance package, worth
about R7.7-billion – which
is also expected to help the
East African Community
(EAC), the Common
Market for Southern and
Eastern Africa (Comesa)
and the Southern African
Development Community
(SADC) to consolidate.
This followed the
endorsement by the East
African heads of state of
the proposed merger of the
three regional trade blocs
into a single free trade area
(FTA) in June this year.
Modalities of the merger
are due to be discussed at
a special tripartite summit
to be held in Kampala in
October.
According to information
released to FTW by the
Trade Law Centre (tralac),
the EU has agreed to
finance the creation of the
larger trading bloc to give
momentum to the region’s
competitiveness in the
global arena. The move is
also aimed at restricting the
outbreak of numerous intergovernmental
trade spats.
The finance package was
announced at a meeting
between the EU and Eastern
and Southern African
states, convened by the
Inter-regional Coordinating
Committee (IRCC), in
Dar es Salaam.
According to trade
and development
commissioner, Louis Michel,
the EU appreciates the
opportunities that exist
in the regional integration
projects and will make the
finance available through the
European Development
Fund (EDF).
“The EU is willing to bring
its full political and financial
support to this project,”
he said.
Michel warned, however,
that although the prospect
of a common ESA bloc is
good, high transport and
electricity costs in the region
could hinder growth.
“To highlight an
example,” he said, “the
cost of exporting a tonne
of maize from Zambia to
Tanzania is higher than the
cost of exporting the same
tonne from Zambia to
Europe or the US.”