2. Energy Use, Economy, and Carbon Emissions
6. Trade and Cooperation
Economic
and Trade Integration in Africa
Africa
and International Trade
Major Regional
Economic Groups Maps
Economic and Trade Integration in Africa
There are numerous trade groupings of various types within Africa (see below).
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A total of 39 African countries are members of the World Trade Organization (WTO), while 5 others (Algeria, Cape Verde, Ethiopia, Seychelles, Sudan) are observers. The 3rd WTO Ministerial Conference was held between November 30 and December 3, 1999 in Seattle, Washington.
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The largest trading blocs within Africa (see maps) are: 1) COMESA (Common Market for Eastern and Southern Africa), with 21 member states (stretching from Egypt in the North to Madagascar and Namibia in the South) and a population of around 385 million (around half of Africa’s total population); 2) SADC (the Southern African Development Community), with 14 member states and a population of around 190 million; and 3) ECOWAS (Economic Community of West African States), with 16 member states (all in West Africa) and a population of around 220 million.
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There is some significant overlap between Africa’s trade groupings. For instance, 8 SADC members (Angola, Malawi, Mauritius, Namibia, Seychelles, Swaziland, Tanzania, and Zimbabwe) are also COMESA members. All members of the Southern African Customs Union (SACU) are members of the SADC.
Types (and Examples) of Economic/Trade Agreements within Africa {Table}
Major Regional Economic Groups Maps
Common Market for Eastern and Southern Africa (COMESA)
Economic Community of West African States (ECOWAS)
Southern African Development Community(SADC)
Communaute Financiere Africaine (CFA) Franc Zones
Select Other Trade Agreements {Table}
Regional Economic/Trade Groups {Table}
Africa and International Trade
Africa makes up only a very small share of world trade, and this share has been declining in recent decades. Trade among African countries is low, and terms of trade with the developed countries are generally not in favor of Africa.
Recent Developments in Regional Trade and Cooperation
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In late July 1999, Tanzania announced its intentions to withdraw from COMESA and instead concentrate on its membership in SADC. Two other countries - Lesotho and Mozambique - pulled out of COMESA in 1997, citing the expense of dual membership.
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There are concerns within several COMESA countries, especially Zambia, regarding their degree of readiness for an intra-COMESA free trade area (FTA). The decision to proceed with the FTA was reaffirmed at a COMESA ministerial in May 1999 in Nairobi, Kenya.
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In June 1999, Zimbabwe and South Africa failed to agree on a solution to their trade differences -- particularly on clothing and textiles.
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The United States and other G-7 (Group of Seven) industrialized countries have proposed debt relief totaling $70 billion for 36 countries, including several African countries, through the Highly Indebted Poor Countries (HIPC) initiatives.
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The United Nations Conference on Trade and Development (UNCTAD) and the Organization of African Unity (OAU) agreed in May 1999 to intensify their efforts at promoting economic growth in Africa. In this context, UNCTAD encouraged action on regional and sub-regional economic cooperation and integration, debt reduction, and international trade with Africa.
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In early 1999, the European Union (EU) reached an FTA with South Africa. The FTA could have a wide-ranging impact not only on South Africa, but on other African countries as well. In recent months, for instance, the EU has been attempting to mitigate any adverse impact of this agreement on the so-called “BLNS” countries (Botswana, Lesotho, Namibia, and Swaziland), all of whom belong to the Southern African Customs Union (SACU). SACU maintains common external tariffs, which are set by South Africa.
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In September 1999, the EU offered to extend its FTA with South Africa to ACP (Africa, Caribbean, and Pacific) countries covered under the Lome Convention. The Lome Convention, originally agreed to in 1975, now includes 15 member states of the EU and 70 ACP countries with 500 million people. The ACP countries are among the poorest in the world.
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On November 4, 1999, the U.S. Senate passed legislation - called the Africa Trade and Development Act of 1999 -- which would reduce or eliminate tariffs and quotas on a wide range of goods made in sub-Saharan Africa. The Act also has been approved by the U.S. House of Representatives, and is strongly supported by President Clinton.
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In May 1999, the U.S. Export-Import Bank (Ex-Im Bank) announced a $200-million, 1-year Africa Pilot Program to help make short-term export credit insurance available to 13 sub-Saharan African countries (Burkina Faso, Cameroon, Chad, Cote d’Ivoire, Equatorial Guinea, Gambia, Guinea, Madagascar, Malawi, Mali, Mauritania, Sao Tome and Principe, and Togo).
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There are concerns within many African countries over the impact of such trade agreements on their economies and/or on specific “sensitive” industries.
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Zimbabwe and South Africa have been negotiating changes to a bilateral trade agreement which expired in 1992. Zimbabwe is concerned over its large trade deficit with South Africa. In September 1999, Zimbabwe’s President Mugabe announced that Zimbabwe, South Africa, and Mozambique were seeking to increase regional integration, including development of the Beira corridor link.
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In May 1999, reports indicated that Mozambique was preparing a formal request to South Africa for a full-fledged bilateral trade agreement.
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On September 2, 1999, Mozambique announced plans for creation of a three-country, integrated economic zone with Malawi and Zambia. The initiative aims to encourage economic development and trade between Mozambique’s Tete province, Zambia’s Eastern province, and bordering areas of western Malawi.
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Kenya, Tanzania and Uganda are in the process of reviving the East African Community (EAC), a group which was dissolved in 1977 due to political and economic differences. The EAC would aim to expand trade and improve the trading environment, promote conservation and sustainable development efforts, promote investment codes by protecting property rights, and increase tourism, among other things.
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In April 1999, Nigeria and the Central African Republic signed a bilateral trade agreement.
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In August 1999, Botswana’s President Festus Mogae said that Botswana would not support initiatives to merge SADC and COMESA into a single large trading bloc. Malawi’s President Bakili Muluzi, on the other hand, pledged his support for such a merger, saying that it would create a stronger regional market.
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Egypt and the United States agreed in May 1998 to a Trade and Investment Framework Agreement (TIFA), viewed as a possible stepping stone to future free-trade talks between the two countries.
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In March 1999, Tunisia and Morocco agreed to create a free trade zone between their two countries. This is to include gradual dismantling of tariff barriers through 2007. Both Morocco and Tunisia also have signed Association Agreements with the EU with the goal of entering into a FTA by 2010. Algeria reportedly is negotiating a similar agreement as part of the Euro-Mediterranean initiative.
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In related news, North African governments are trying to revive the Maghreb Arab Union (UMA), which was founded in 1989 and which aims to create a common market between Algeria, Libya, Mauritania, Morocco, and Tunisia.
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Meanwhile, Egypt (which also is a member of COMESA) is pushing for establishment of a pan-Arab free trade zone by 2007. Egypt is negotiating with several Arab countries, including Libya, Morocco, and Tunisia, on this idea.
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The fourth Afro-Arab Trade Fair was held in Dakar, Senegal in April 1999. Currently, trade between the Arab world and African countries is very low, and mainly concentrated on the export of raw materials (specifically, oil and agricultural goods).
Select U.S. Government Sponsored Energy-Related Projects in Africa {Table}
Select African Energy Projects Sponsored by Multilateral Agencies {Table}