* African leaders hope for trade-led growth boost
* Nigeria, South Africa do not to sign up
* Continent gives itself 18 months to hammer out details
(Adds South African presidency comments)
By Clement Uwiringiyimana
KIGALI, March 21 (Reuters) - African leaders agreed on
Wednesday to form a $3 trillion continental free-trade zone
encompassing 1.2 billion people, but its two biggest economies,
Nigeria and South Africa, did not sign up, diminishing its
The African Union started talks in 2015 to establish a
55-nation bloc that would be the biggest in the world by member
states, in a bid to increase intra-regional trade, which sits at
a measly 15 percent of Africa's total commerce.
Rwandan president Paul Kagame, host of an AU summit called
to conclude the initial negotiations, declared the meeting a
success after 44 African nations signed up to establish the free
trade bloc within 18 months.
It was not immediately clear why Nigeria stayed on the
sidelines, but South Africa President Cyril Ramaphosa said he
would sign once necessary legal processes were done.
"President Ramaphosa has undertaken that South Africa will
become a signatory to the agreement once the legal and other
instruments associated with (the trade bloc) are processed and
ratified by South African stakeholders and parliament," the
presidency said in a statement.
Others staying out of the bloc were Botswana, Lesotho,
Namibia, Zambia, Burundi, Eritrea, Benin, Sierra Leone and
"It would have been great if the two biggest economies on
the continent, Nigeria and South Africa, had signed, but the
most important is that the rest of the continent is sending a
right message to these two biggest economies that we are moving
ahead without you," said Michael Kottoh, an analyst at
Confidential Strategies in Ghana.
The project needed a minimum of 22 countries signing up to
get off the ground and Kagame hailed the effort so far.
"What is at stake is the dignity and well-being of Africa's
farmers, workers and entrepreneurs," he said.
AU trade commissioner Albert Muchanga also put a positive
spin on the absence of the top two African economies, telling
Reuters they would soon join in.
"They are still doing national level consultations and so
when they finish they will be able to come on board," he said.
Economists point to Africa's low level of intra-regional
trade as one of the reasons for the continent's enduring poverty
and lack of a strong manufacturing base.
It is blamed on a host of factors, from colonialism, to high
internal tariffs to poor road and rail links to excessive border
bureaucracy and petty corruption at frontier checkpoints.
The relatively small size of many African markets - only
Nigeria and Ethiopia have populations estimated at 100 million
people or more - also inhibit private sector investment.
Africa already has an alphabet soup of competing and
overlapping trade zones - ECOWAS in the west, EAC in the east,
SADC in the south and COMESA in the east and south - although
only the EAC, driven mainly by Kenya, has made significant
progress towards a common market in goods and services.
Analysts said governments needed to do more to ensure goods
and people flowed freely across borders.
"If they just sign the agreement without opening the
borders, without getting rid of non-tariff barriers and if they
don't work on free movement of people, it is not going to work,"
analyst Kottoh said.
Even the six-nation EAC has its sticking points - Tanzania
has been known to kick out Kenyan executives and impound Kenyan
imports at the border, in violation of EAC rules.
Businessmen said the current set-up forced them to look
outside the continent, particularly Asia for manufactured goods.
"It is easy and cheaper to buy in Asia than to buy in the
sub-region because of less-flexible rules of origin and
non-tariff barriers that are not clear," said Meriem
Bensalah-Chaqroun, head of the Moroccan Confederation of
Sudden changes in rules and impromptu checks on goods also
held up supply chains.
"Some countries all of a sudden decide they are going to do
a quality check on goods but they don't really know what they
want to check. That slows the trade," said Thomas Schafer, CEO
of Volkswagen Africa.
"We are not able to bring a vehicle from South Africa into
Zimbabwe in a cost-efficient and fast way. That needs to
(Additional reporting by Olivia Kumwenda-Mtambo in Johannesburg
Writing by Duncan Miriri
Editing by Ed Cropley and Alison Williams)
First Published: 2018-03-21 17:36:59
Updated 2018-03-21 20:04:52
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