Currencies, Emerging Markets, Frontier Markets, Stocks

African Union Summit To Endorse Creation Of A $2 Trillion Free-Trade Zone

African nations are taking steps toward creating a free-trade zone with a combined size of $2 trillion, as heads of state meet in Johannesburg (South Africa) this week,” Bloomberg reports.

South Africa

Talks on removing the barriers to trade and the movement of people between the continent’s 54 countries will begin on June 15 at the African Union summit and conclude by the end of 2017 according to the news agency.

Africa’s three major regional economic committees (RECs), which account for 51 percent of Africa’s $2.3 trillion GDP, signed recently a deal in Egypt to create free trade zones for goods immediately, with the hope of introducing services and intra-continent investor opportunities at a later stage.

Egypt projects to rise its exports to African countries by 100 percent to $5 billion within the next three years.

Africa FDI inflow hit $128 billion in 2014, world’s 2nd largest destination. Consumer facing sectors again attracted the largest share of inflows,” Regional Director for the Middle East & Africa at the Economist Intelligence Unit reported.

Free-trade zones may have a limited effect on regional economic integration because of a lack of implementation and weak infrastructure, according to John Ashbourne, an economist at Capital Economics Ltd. in London,” Bloomberg reports. “Poor infrastructure makes traveling across long distances difficult and costly,” Ashbourne said.

The infrastructure gap has been spotted by China which has been fighting to secure many lucrative infrastructure related deals.

As an example, one of the largest railway companies in China, Construction Corp Ltd (CRCC), last April inked two construction deals in Africa worth a combined $5.5 billion, highlighting its ability to compete on the international stage.

CRCC China-Africa Construction LTD, which is a wholly owned subsidiary of CRCC, signed a $3.51 billion contract to build an intra-city railway in Nigeria in addition to a $1.93 billion construction contract for a residential project in Zimbabwe, China’s Xinhua news agency reported.

About ETFalpha

Chief ETF Strategist & Co-Founder at EMerging Equity


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