Africa’s Trade Struggle

South Africa and its partners in the 14-nation Southern African Development Community (SADC) have struggled for three years to reach agreement on regional free trade. They recently announced that a deal is near. If it holds together, a free-trade agreement for southern Africa would create a market of 150 million people and provide the stimulus for Western companies to invest in the regional economy. Together with peace, political stability, rule of law and the development of regional infrastructure, free trade is a key element for prosperity in southern Africa.

Economic integration has been a slow and frustrating process, interrupted by civil wars in SADC member countries Congo and Angola. Moreover, judging by the rhetoric coming out of some of its capitals recently, the bloc is often closer to a trade war than a common market. The hostility is directed mostly at South Africa, whose economy is many times bigger than that of the rest of the SADC combined.

There are signs of improvement, however. The belligerents in Congo’s 11-month-old civil war have agreed to a tenuous cease-fire. Officials attending last week’s Southern Africa Economic Summit sounded upbeat about the pace of economic integration, predicting that a free-trade deal will be reached by the end of this month. The summit itself provided an encouraging sign that economic integration is seen as a necessity, a means to diversify economies that are all too dependent on the exports of raw materials. The risks of that dependence were driven home last week when the price of gold dropped to a 20-year low, battering South Africa, the world’s leading producer of the metal.

Trade within southern Africa is relatively small, as most member countries have few finished goods to sell; they find better markets for raw materials outside the region. To boost internal trade, the SADC countries, South Africa most of all, must make significant concessions to others. A trade agreement that continued to protect domestic industries, especially textiles, automobiles or food processing, would be worse than no agreement at all. It would make future trade liberalization more difficult.

Just as important as substance is the speed of African economic integration. As U.S. Deputy Secretary of Commerce Robert L. Mallett reminded the Africans at the summit, “We cannot remain in this posture of standing in the morass saying it is difficult to move because this is southern Africa.” Such blunt language irked South Africa’s trade minister, Alex Erwin, who took exception to what he called Mallett’s preaching, but it may be that bluntness is what’s needed. The region has been dithering for years, always finding a reason not to act.

Much of sub-Saharan Africa cannot yet hope to join the world economy. But the southern African region, with South Africa as its big engine, can make the leap to a true common market, and should.