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The Minister of Trade and Industry, Mr Ebrahim Patel, says building the African Continental Free Trade Area (Caftan), and making South Africa’s trade promotion efforts more effective and strategic, was very crucial to economic growth in the country and the African continent in general.

Minister Patel says the initiative would connect 1.2 billion people into a single bloc where products would be manufactured, bought and sold between countries, without any trade tariffs.

According him, the agreements such as the Caftan lay the basis for increased infra-Africa trade and ‘cement the continent’s position as the next growth frontier.

The Caftan was officially launched into its implementation phase at a Special AU (African Union) Summit in Niamey in Niger, after 54 countries signed the agreement and 27 countries ratified it, and trading under the terms of the Caftan intended to come into effect on 1 July 2020.

“The Agreement will fundamentally change and reshape the South African economy. Already, exports to other African countries support about 250 000 South African jobs and it is the fastest growing part of our manufactured exports,” highlights Patel.

Minister Patel adds that, for the current Administration there would be an enormous amount of work that would need to be done to finalise the detailed modalities and benefits of the Caftan.

“We will finalise a tariff schedule immediately, listing all products covered by the Caftan, and the rules of origin which sets out what qualifies as a locally-manufactured article.”
 
Minister Patel further indicates that over the period of the current Administration, agreement on the following, would be developed:

• Services that will be traded free of duties within the Caftan
• Investment protections for African companies operating in each other’s markets
• Competition policy on the continent, and
• Trade-related intellectual property rules.

Minister Patel adds that this is the work of a generation, a truly historic mission to realise the dream of generations of African leaders to build a single, prosperous and united Africa.  

“But to realise the gains, we will need to address many challenges too, including a strong domestic and Africa-wide customs administration, systems to enable swift payments between countries; proper infrastructure connecting African countries with each other; and above all, getting the South African industry to be Caftan-ready through competitive-enhancing support,” indicates Patel.
 
He adds that, beyond Africa, the government we will work to increase the volume and address the composition of our exports, to shift from simply selling raw materials to the rest of the world and importing finished goods.
 
“Over the next few weeks, we will be concentrating on finalising terms of an agreement between South Africa and the UK in case of a no-deal Brexit, to protect SA exports and jobs.  We will engage the US around AGOA and point to the mutually beneficial impact thereof,” concludes Minister Patel.
 
Issued by: The Department of Trade and Industry