CAIRO: Africa nations are looking to fuse the continent’s two main trading blocs to form a broader free trade agreement, officials said Tuesday at a Cairo conference.
The Cape-to-Cairo free trade agreement would merge the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC), said Egypt’s Minister of Trade Rachid Mohamed Rachid.
Representing the continent’s largest economies, Rachid and South Africa’s Deputy Ministers of Trade and Industry, Thandi Tobias, are spearheading the drive toward this end.
Rachid said the deal would be a boon to both Egypt and South Africa’s economies to have access to the continent’s 700 million inhabitants.
A free trade pact between the two blocks, both ministers asserted, can help increase the profile of the African continent and make investments more attractive to those hoping to access the hypothetical, new economic block.
Africa boasts some 30 regional trade arrangements, but the continent receives less than 4 percent of global foreign direct investment, Reuters reported.
The ministers met as part of an Egypt-South Africa Business Forum to discuss ways to stimulate bilateral trade and cooperation in several fields.
“Egypt strongly supports all cooperation means for increasing Egyptian-South African commercial exchange,” Rachid said.
Egypt and South Africa already share a number of different bilateral trade agreements, such as the Egyptian-South African Joint Business Council, established in 2001.
The possibility of creating a new Joint Trade Committee was mentioned, which could witness its first meeting held in the coming months in South Africa.
Rachid underscored that the objective of the committee will be to “identify areas of interest” and “strategic challenges” for both sides as well as obstacles and how to surmount them.
Bilateral trade between the two nations reached $158 million in 2009, with Egyptian exports to South Africa reaching $27.6 million and Egyptian imports from South Africa attaining $140.4 million.
As of June 2010, South Africa had invested LE 13.39 million in Egypt in the areas of industry, agriculture, services, tourism and communications and IT.
Some of Egypt’s main exports to South Africa include, fresh and dried fruit, petroleum oils, petrochemicals, men’s clothing and types of glass, while South Africa’s exports to Egypt include, vehicles, tobacco, stainless steel, iron, wool, nylon, yarn, paper and fresh fruits.
South Africa has experienced one of its most productive growth periods in the past ten years. Presently, South Africa, part of the Emerging 7 (E7), leads the continent economically, with $467.1 billion in GDP, which represents a whopping 25 percent of the continent’s total GDP.
Investments in the country have grown steadily from 15 percent in 2002 to 21 percent in 2010.
Rachid acknowledged South Africa’s economic prowess, noting that it “maintains a position as a country that attracts foreign direct investment.”
He added that Egypt is keen to further cement its economic ties and cooperation with the African country largely “thanks to its diverse economic sectors.”
Deputy Trade Minister Tobias was keen to underscore the progress the country has made in the area of infrastructure, adding that her country has recently announced a “master plan” for future infrastructure development.
To ensure that South Africa is able to follow through in its promise to transform itself into a welcoming investment climate, the government introduced three initiatives to lure Egyptian and other international investors.
The first is the creation of industrial development zones, which are geared toward export-oriented industries, followed by a “small and medium enterprise development program,” and last, a “strategic investment projects” initiative, which provides a tax allowance of up to 100 percent — with a maximum allowance of about $100 million per project — on the costs of building, machinery, plants, etc for investments starting at $85 million.
It was mentioned by Rachid that the business forum was not the first effort made by both countries on trade issues, as they had showed solidarity during World Trade Organization agreements, believing doing so would provide both with enhanced “reach” in the context of international political issues.
The next ministerial visit is slated to take place in early 2011 to continue the themes addressed during the first Egyptian-South African Business Forum.
South African President Jacob Zuma visited Cairo on Tuesday with more than 100 South African businessmen, including executives from power utility Eskom, national oil company PetroSA and several ministers, Reuters reported.