The heads of state involved in the weekend summit of three economic blocs in Africa - Sadc, Ecowas and Comesa - have decided that member countries must finalise a free trade agreement within three years, Minister of Trade and Industry Rob Davies said today.
He was addressing a transport investors conference organised by the transport department to attract investors in massive infrastructure projects planned for the sector.
The so-called Grand Free Trade Area would straddle 26 countries, stretching from Cape Town to Cairo.
Mr Davies said the heads of state had instructed that the free trade agreement would have to have a development aspect because many of the constraints to trade on the continent were of an infrastructural or logistical nature.
SA hailed the meeting as a historic milestone that would give rise to sustainable economic development on the continent.
"We meet fully conscious of the collective responsibility we bear towards Africa's founding fathers to create a single continental market of real economic value," said President Jacob Zuma during the opening .
SA stands to make considerable gains with tariffs likely to be cut when the bloc is formed. South African companies in the financial services, telecommunications and retail sectors have operations throughout the three blocs.
Tariffs in the Common Market for Eastern and Southern Africa and the East African Community are twice the Southern African Development Community's average, a condition SA is hoping to change, especially since its exports to both groupings have doubled in recent years, Matthew Stern of DNA Economics said last week.
Mr Zuma told his peers to take responsibility for creating an environment conducive to foreign direct investment.
The proposed free trade area would merge three existing blocs covering central, eastern and southern Africa - Sadc, the East African Community and Comesa .
The blocs have a combined population of 590-million and a gross domestic product of $860bn a year according to Sindiso Ngwenya, general secretary of Comesa.
"Africa is growing, but there are risks. Urgent attention is needed to foster inclusive growth, to improve political accountability, and address the youth bulge," said Mthuli Ncube, chief economist and vice-president of African Development Bank.
The International Monetary Fund expects Africa to grow faster than the global average in the coming years. Last year, six of the world's 10 fastest-growing economies were in Africa.
The proposed bloc faces significant obstacles: tariff barriers; poor infrastructure; weak supply chains; and economies often reliant on natural resources.
The bloc would bring under one roof such diverse economies as those of SA, Egypt, Angola and Ethiopia.
It would also include countries facing or struggling to outgrow turmoil, such as Libya, Madagascar, Sudan and Zimbabwe.
Countries which fall outside the three blocs would be invited to join once a free trade area was established.
Africa's top five emerging trade partners are now China (38%), India (14%), Korea (7,2%), Brazil (7,1%), and Turkey (6,5%).
"This 'tripartite' is blazing a path to be followed by other regions in Africa in realising the dream of a united Africa," Mr Ngwenya said yesterday.
"There are a number of areas where, by building on the work already done by member and partner states, working regionally, we can expect quick wins," he said.
King Mswati, leader of cash- strapped Swaziland and chairman of Comesa, said the trade agreement would bring bigger opportunities for the small, landlocked kingdom. "The integration of various regional blocs would no doubt improve trade within the African economies," King Mswati said. "This cannot be achieved overnight, it could only be done in phases, as there is a lot of work that still needs to be done."
"We are ready to negotiate (a free trade zone) in three years," Pierre Nkurunziza, Burundi's president and chairman of the East African Community, said. "We have no right to delay the establishment of a tripartite free trade zone any longer."
Erastus Mwencha, deputy chairman of the African Union Commission said: "It is now well- documented that regional integration is one of the four factors that have sustained Africa's growth in the last decade, as well as the quick and robust recovery from the recent financial crisis." With Sapa-AFP