Leaders of 26 African countries on Wednesday signed a new trade pact to create a common market across half the continent which will serve 625 million people, offering Kenyan traders a wider market for their produce.
The Tripartite Free Trade Area (TFTA) agreement will cap five years of negotiations to set up a common framework for preferential tariffs that will ease the movement of goods across member countries.
The signing took place at a summit hosted by Egyptian President Abdel Fattah al-Sisi in the Red Sea resort of Sharm el-Sheikh. Kenya was represented by the Deputy President William Ruto.
The deal will pool the interests of the East African Community, Southern African Development Community and the Common Market for Eastern and Southern Africa (Comesa), whose members have a combined gross domestic product of more than $1 trillion (Sh97 trillion).
“It is official — the Mega Intra-Africa FTA has been launched. DP signs alongside Heads of Government of member States,” Foreign Affairs PS Karanja Kibicho said shortly after the signing ceremony.
The schedule for “dismantling trade barriers” was yet to be worked out and the agreement will still have to be ratified by national parliaments within two years.
The TFTA envisions the eventual merger of the three blocs. The business community, in particular, would benefit from an improved and harmonised trade regime which reduces the cost of doing business as a result of the elimination of overlapping trade rules.
For Kenya, which has been pursuing Africa-focused diplomacy, the ongoing efforts to merge the three regional economic blocs is set to expand its space in the regional market.
“This is a defining moment both for Kenya and Africa. The FTA will increase intra-African trade by easing trade restrictions to allow easier movement of goods and persons in the region,” said Ms Phylis Wakiaga, CEO of Kenya Association of Manufacturers.
The combined free trade area also brings to the fold markets like South Africa, Botswana, Lesotho, Namibia, Mozambique and Angola which Kenya does not have a preferential trade pact with.
Despite scepticism — experts point out that only 12 per cent of Africa’s trade is between countries on the continent — the TFTA has been widely welcomed by world business leaders.
The United Nations Conference on Trade and Development said in 2013 that if Africa is to boost its intra-continental trade, it must focus on creating “more space for the private sector to play an active role”.