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African Trade Zone Welcome, But...

MMegi, Botswana

African Trade Zone Welcome, But...

By the editor

27 October 2008

Following the recent establishment of the SADC free trade zone in August, just last week, the leaders of three African trading blocs - SADC, EAC, and Comesa - agreed to create a free trade zone of 26 countries.

Proponents of the deal say it will ease access to markets within the region and end problems arising from the fact that several countries belong to multiple groups.

The deal is also expected to strengthen the bloc’s bargaining power when negotiating at an international level. It will result in intra-regional trade and boost economic growth.

Other positives about the deal are that the cooperating regional blocs will for the first time carry out joint infrastructure and energy projects in the zone.

African leaders are certainly hoping to entice overseas investors to come and set up businesses in Africa without the fear of export duties levied on their goods and services.

This could spell a new beginning for Africa, which over centuries has been seen as a source of raw materials that are then shipped and processed overseas.

Doubtlessly, Africa is well-endowed with minerals, water, and other resources, which when creatively harnessed, have the potential to transform Africa’s industrial outlook.

The move has the potential to help Africa enter its own industrial revolution.

While this sweetener can prove successful in wooing multi-nationals into Africa, our leaders also must pause and consider the possible influence of this free trade zone on home grown products and services.

A classic example can be found in Botswana where locals are only starting to create their own industries through CEDA, a government funding scheme.

With a wave of overseas products just about to sweep through Africa, the question is how many of our small and medium sized industries will be spared?

Multinationals by their nature keep repatriate their profits to their places of origin. Save for job creation. It is feared that the bulk of the profits made in Africa will still head back to the investors’ places of origin.

We have multinationals that have been operating here for over a 100 years with their headquarters in London, and these types of companies are on the increase.