By Duncan Miriri
NAIROBI, July 4 (Reuters) - African leaders will decide on
Sunday which nation will host the headquarters for a continental
free-trade zone that aims to eventually unite the continent's
1.27 billion people and its $3.4 trillion nominal gross domestic
product.
Leaders at the African Union summit in Niger will also set a
date for trading to begin in the African Continental Free Trade
Area, a deal that 52 of the continent's 55 states have signed,
although only 25 have ratified it. The bloc aims to ultimately
remove trade barriers and tariffs between members.
WHICH COUNTRIES WANT THE HEADQUARTERS?
Under the Addis Ababa-based African Union's rules, all of
its 55 members may bid to host the headquarters. Kenya, Ghana,
eSwatini, Madagascar and Egypt are all in the race. Ethiopia and
Senegal have pulled out.
Those in the race represent the continent's main regions:
Kenya from the east, Ghana from the west, eSwatini for southern
Africa, Madagascar for the Indian Ocean islands and Egypt
representing the north.
Egypt holds the AU presidency this year and has been
promoting itself as a linchpin for African trade. “Egypt is one of the oldest members of the African Union and
enjoys strong relations with African states,” said an official
from Egypt's trade ministry. “We have all the requirements.”
WHAT ARE THEIR CHANCES?
Kenya and Egypt already host head offices for other
international bodies and are well connected by established
national airlines.
Kenya hosts the headquarters of the U.N. agencies for the
environment and for urban development: UNEP and UN-Habitat.
Egypt hosts the headquarters of the Africa Export Import Bank.
"Nairobi is a very natural location for such a body. It is
easy to reach any part of this continent (from here)," Peter
Munya, the Kenyan minister of trade, told reporters.
Tiny eSwatini, formerly known as Swaziland, has secured the
backing of its regional trade bloc, the Southern African
Development Community (SADC).
WHY DOES IT MATTER?
Whoever hosts the headquarters gains prominence and
prestige. The winning country will also secure jobs for citizens
at the secretariat, and get a cash boost to its travel and
tourism industries.
The African Union wants to boost annual intra-continental
trade to 25-36 percent of all African commerce within five
years, from just 18 percent currently, and attract large,
long-term investments from firms like global carmakers.
"Hosting the (headquarters) would ensure that eSwatini
becomes Africa's commercial hub. The country will become a hive
of business activities," Mancoba Khumalo, eSwatini's minister of
commerce and trade, told local media.
WHAT NEXT?
After African Union heads of states and governments pick the
host country on Sunday, they will unveil regulations governing
issues like trade liberalisation, rules of origin, removal of
non-tariff barriers and the development of a payments and
settlements system.
They will also set a date for trading to start in the bloc.
The deadline should allow time for firms to make adjustments and
states to prepare new trade documents.
Nigeria, the continent's biggest economy, said this week it
will sign up on Sunday.
The bloc must figure out how to avoid member states
exporting or smuggling raw material outside the continent that
was traded tariff-free under the guise of intra-African trade,
said Anzetse Were, a Kenyan development economist.
"Given Africa's underdeveloped manufacturing and propensity
to export raw commodities, without co-ordinated policy change,
the (bloc) may entrench and enable this dynamic," she said.
WILL THE BLOC WORK?
Past attempts at economic integration have created an
alphabet soup of competing and overlapping trade zones - ECOWAS
in the west, EAC in the east, SADC in the south and COMESA in
the east and south.
Albert Muchanga, the AU's commissioner for trade and
industry, said implementation "will be very, very difficult but
I think we have the capacity".
"The status quo is not good for Africa. You have got 55
fragmented states, which traditionally are small and weak in the
global system," he told Reuters by phone.
But the continent had a combined $3.4 trillion gross
domestic product, he said.
"As long as we maintain the status quo, Africa really will
have very low development prospects."