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FROM REGIONAL ECONOMIC COMMUNITIES TO A CONTINENTAL FREE TRADE AREA: Strategic tools to assist negotiators and agricultural policy design in Africa

Source: United Nations Conference on Trade and Development (UNCTAD)

The ultimate purpose of this work is to inform African policy-makers with strategic tools to assist trade negotiations and agricultural policy design. Its focus is on the eight Regional Economic Communities that exist in Africa, as they do not only constitute key building blocks for economic integration, but are also important actors working in collaboration with the AU in ensuring peace and stability in their regions.

Around 80 per cent of all intra-African trade  ows through Regional Economic Communities (RECs) and 20 per cent  ows outside trade agreements. Based on trade volumes,  ve countries play central roles in mobilizing the intra-African trade – Algeria, Côte d’Ivoire, Egypt, Nigeria, and South Africa – being responsible for 67 per cent of all intra-African traded volumes in 2015. However, the network analysis indicated that four countries in Africa represent central players in trade networks in the continent, namely South Africa, Côte d’Ivoire, Kenya and Morocco. As a result, these countries bene t from more diversi ed trade  ows and higher proportion of intermediate and value-added products than their neighbors. As a result, their experience could serve as pathways to development outcomes due to their pivotal role on connecting trade channels among SADC, CEN-SAD, COMESA, EAC, IGAD, UMA and ECOWAS. Among them, South Africa is a central player on establishing the CFTA because the country is not only responsible for the largest traded volumes in Africa (i.e. about 45 per cent of all intra-Africa exports) but also is a major commercial hub. South Africa has direct trade with 96 per cent of the intra-African network (53 countries out of 54 AU ́s member states).

Many producers based in African countries fall short to compete in domestic and regional markets due to many challenges such as the lack of infrastructure and supporting processes that leads to high unit cost (e.g. fresh poultry produce in Mozambique versus frozen poultry from Brazil). In addition, there is substantial and thriving informal trade in the region, which means that intra-African trade is in fact likely to be signi cantly higher than of cial statistics suggest, having direct implications for  scal revenue of governments in the region