Africa is set to create a free trade zone covering 26 countries, from South Africa to Egypt, and more than half of the continent’s GDP in order to facilitate the movement of goods across member countries.
Governments in Africa have been working on ways to boost trade within the continent but poor infrastructure has proved prohibitive.
Three already existing African trade blocs, the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA), will unite into a single new zone, BBC News reported.
Dubbed the Tripartite Free Trade Area (TFTA), the deal is expected to remove trade barriers, making goods less costly, and reenergize the $1 trillion worth of economic activity in the region.
Calestous Juma, a Kenyan academic who spoke to the BBC said the move was “extremely exciting” and could mean trade within Africa spikes to 30 percent from its present 12 percent.
“The comparison with Europe is 70 percent of their trade is within Europe,” he said during the BBC’s Focus on Africa program. “By having larger markets, it signals the possibility of being able to manufacture products at a scale that is cost-effective.”
That banks will be able to lend to manufacturers, which can be considerable investors, should be another boon for the sector and could provide greater access to finance, and more investors coming to the continent.
The TFTA will be officially unveiled at the upcoming African Union Summit in South Africa this week. Each nation’s parliament will still need to approve the deal, which is expected to happen next year.