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Cameron promises practical support for Cape-to-Cairo trade bloc vision

18th July 2011

By: Terence Creamer
Creamer Media Editor

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British Prime Minister David Cameron has committed his government to providing practical support to the new African tripartite free trade area (T-FTA), which, once concluded, could span from Cape to Cairo and include 27 countries, should Africa’s newest country, South Sudan, decide to join one of the three blocs participating in the talks.

The so-called “grand” T-FTA negotiations include members from the East African Community, the Common Market of Eastern and Southern Africa and the Southern African Development Community, and it was anticipated that the enlarged bloc could be established during 2013.

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Speaking at the Union Buildings on Monday, Cameron, who was accompanied by a planeload of business representatives, said the T-FTA had the potential to raise gross domestic product (GDP) on the continent by $62-billion a year, which would dwarf current yearly aid flows of around $20-billion.

The UK would support projects to beef up key “trade corridors” and to streamline border crossings.

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The UK government was already supporting the so-called North-South Corridor, with the Department for International Development (DFID) having funded some of the initial scoping work. DFID had also supported the initiative to streamline border operations at the Chirundu border post between Zambia and Zimbabwe into a one-stop customs point.

South Africa’s Trade and Industry Minister Dr Rob Davies told Engineering News Online that work was currently being done to replicate the Chirundu experience (where waiting times had fallen from days to hours) at Beitbridge, on the border between South Africa and Zimbabwe.

Davies indicated that the intention was to invest in “hard” infrastructure to expand the crossing from its current single-lane, while implementing improved procedures to reduce delays.

President Jacob Zuma welcomed the UK government’s support of the T-FTA, which would incorporate more than half of the continent’s countries and people. He also encouraged British companies to participate in the opportunities that would arise from further regional integration.

If successfully concluded, the T-FTA would comprise a market of 533-million people, with a combined GDP of $833-billion, or a GDP per capita of $1 500. That equated to 58% of Africa’s GDP and 57% of the continent’s population. It could also incorporate economies that are collectively expected to expand at 5.8% in 2011.

Davies said that prospects for setting up manufacturing within the T-FTA had been canvassed in meetings with UK government and business delegates. The idea was to encourage the establishment of factories that took advantage of the rules-of-origin benefits that could arise. Particular attention was paid to opportunities in the automotive, aerospace and infrastructure-input sectors, as well as for some of the UK’s services industries.

Cameron also acknowledged the current reality of a “starving” Africa, indicating that the UK government had mobilised £52-million for humanitarian aid to the drought stricken regions of Somalia and Kenya, as well as the refugees massing on the Kenyan and Ethiopian borders. He described the Horn of Africa crisis as the largest drought-related catastrophe for the region in a generation and urged others to join in taking “urgent and decisive action”.

But Cameron also stressed that parts of the continent were “booming” and that South Africa represented the “gateway” to a region that was set to grow strongly.

This potential for British business had underpinned his controversial decision to visit the territory despite rising domestic pressures regarding the so-called phone hacking scandal.

The Prime Minister asserted that it was correct for him to “get out there” and encourage trade and investment in the interest of British and South Africa jobs and growth. He noted, too, that his visit to Africa was part of a pattern of engagement with fast expanding developing regions and followed similar visits to India and China earlier in the year.

Both Zuma and Cameron also committed the two countries to doubling bilateral trade between the UK and South Africa by 2015, which was recovering following a sharp decline during the recent global economic crisis.

Bilateral trade during the first four months of 2011 rose by 11%, following a 4% rise in 2010. But it was still recovering from a 37% slump recorded in 2009. Therefore, at the current rate of expansion trade could realistically only double by 2017.

Therefore, Zuma and Cameron stressed the need to accelerate trade efforts.


 

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