Preferential trade agreements, also known as PTAs, have been growing in popularity in Africa over the years. Since the establishment of the African Continental Free Trade Area (AfCFTA), there has been a significant rise in the number of PTAs negotiated among African countries.
A preferential trade agreement is a trading arrangement between two or more countries that offers preferential access to each other`s markets. By granting special privileges to certain products, such as reduced tariffs or exemptions from quotas, PTAs provide an incentive for increased trade between member countries.
In Africa, PTAs are seen as a means to foster economic integration, increase regional trade, and improve the competitiveness of African countries in the global market. They allow African economies to take advantage of the natural complementarities that exist between them. For example, countries with a surplus in agricultural production can export to countries with a deficit in the same sector.
There are different types of PTAs in Africa, including bilateral agreements, regional agreements, and multilateral agreements. Bilateral PTAs are made between two countries, while regional PTAs involve a group of countries from a specific region. Multilateral PTAs are agreements between three or more countries.
One of the most significant PTAs in Africa is the East African Community (EAC) agreement. The EAC is a regional intergovernmental organization that promotes economic integration among its members, which include Kenya, Tanzania, Uganda, Rwanda, Burundi, and South Sudan. The agreement has facilitated increased trade among these countries, with total intra-EAC trade increasing from $2.3 billion in 2005 to $6.3 billion in 2018.
Another notable PTA in Africa is the Southern African Development Community (SADC) agreement. The SADC is a regional economic community that aims to promote economic development and regional integration among its member states, which include South Africa, Botswana, Lesotho, Namibia, Eswatini, Zambia, Zimbabwe, Angola, Democratic Republic of Congo, Malawi, Mauritius, Mozambique, Seychelles, and Tanzania. The SADC agreement has led to increased trade among member countries, with intra-SADC trade rising from $7.6 billion in 2005 to $34.8 billion in 2018.
The African Continental Free Trade Area (AfCFTA) is expected to boost PTAs in Africa further. The AfCFTA is a free trade agreement among 54 of the 55 African Union nations, aimed at creating a single market for goods and services on the continent. The AfCFTA is expected to increase intra-African trade by 52.3% by 2022 and to remove tariffs on 90% of goods.
In conclusion, PTAs have become an essential tool in Africa`s quest for economic integration, increased trade, and improved competitiveness in the global market. As more African countries join together to negotiate PTAs, the benefits of regional trade will become more apparent, leading to enhanced economic growth and development.