Leaders of 26 African countries, including Egypt, agreed Wednesday to form the continent’s largest free trade zone.
The deal, which was signed in Egypt’s Sharm el-Sheikh, will unite three existing trade zones: the Southern African Development Community (Sadc), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (Comesa).
Egypt previously only belonged to the Comesa zone.
The bloc, known as The Tripartite Free Trade Area (TFTA), aims to create a free trade zone for goods and, eventually, services and investment. Wednesday’s statutory agreement still needs to be fine-tuned and ratified by the parliaments of member states, a process that could take several more years.
“What we are undertaking today constitutes a critical juncture and a turning point in the history of African economic integration,” said Egyptian President Abdel-Fattah al Sisi in his opening remarks.
The grouping encompasses a combined population of 625 million people with a gross domestic product of about US$1.2 trillion, representing around 57 percent of the total African population and around 60 percent of the total African gross domestic product, Sisi added.
Pan-African economic integration has long been a dream for the continent’s leaders, but intra-regional trade remains low. According to African banking conglomerate Ecobank, as of 2011, trade among African countries accounted for only 11.8 percent of the continent’s total trade. By contrast, almost 35 percent of total African trade was with the European Union, and 17.6 percent was with China.
The TFTA deal stands to remove some of the legislative hurdles stifling trade on the continent, but significant obstacles remain, such as the scarcity of transport links between countries.