The existing regional trading blocks are the East African Community, created in 2000; the Southern African Development Community, created in 1980; and an overlapping Common Market for Eastern and Southern Africa, which also took shape in the 1980s. The East Africa Community has made some progress fostering
trade between its member countries, which include Kenya, Tanzania, and Uganda. Countries in the Southern African Development Community have a common set of
external tariffs and several member states use the South African rand, the most liquid and widely traded currency on the continent. However, the existing patchwork of African trading blocks—there are some 17 in all, with many countries being members of more than one—has made it difficult to realize the gains from trade that could flow from an expanded single market. An African firm selling goods on the continent still faces an average tariff of 8.7 percent, compared with a 2.5 percent tariff on goods sold overseas. Other costs of intra-African trade include often lengthy stops at borders for customs inspection, excessive customs-related bureaucracy and red tape, and a lack of adequate physical infrastructure, including roads and railways. As a consequence of such factors, it can take three weeks for a shipping container to travel the 700 miles from the Kenyan port of Mombasa to Kampala, the capital of Uganda. There are also some vexing local content requirements. The South African Development Community, for example, requires that clothes traded within the region are both manufactured and sourced there to qualify for lower tariffs. However, because few textiles are produced in the region, the rules have stifled trade in garments. For all these reasons, African countries are more likely
to trade with Europe and America than they are with each other. Only 19 percent of Africa’s $930 billion in trade is with other countries on the continent. By comparison, some 60 percent of Europe’s trade is within its own continent, as is 40 percent of North American trade. Other factors contributing to the lack of intra-African trade include low industrialization levels, restricted movement of labour, poor infrastructure, and a high dependence on exporting unprocessed commodities in many countries. The thinking behind the TFTA is that harmonizing rules, reducing tariffs, and streamlining or removing customs procedures will allow African firms to sell more goods and services to their neighbours, enabling them to achieve greater economies of scale and lower costs, which would benefit all parties to the agreement. On the other hand, such agreements may prove difficult to reach and, if the past is any guide, even more, difficult to implement, given political realities on the ground. Some observers think that the TFTA is too ambitious an undertaking and that focusing effort on improving the three existing regional groups would yield more gains. It’s easier, they argue, to reach an agreement between five adjacent member states, as in the case of the East African Community, than 26 very different countries scattered over the entire continent. Despite the skepticism surrounding TFTA, Africa nations have even bigger ambitions. In 2016, African leaders committed themselves to establish a Continental Free Trade Area (CFTA) that encompasses all African countries. If established, the CFTA would be the largest free trade area in the world measured by population, spanning 54 countries with more than 1 billion people (and an estimated 2 billion by 2050), and a gross domestic product of
more than $3 trillion. Sources: “Intra -African Trade: The Road Less Travelled,” The Economist, April 17, 2013; Martin Stevis and Patrick McGroarty, “African Leaders
Pledge to Create a Free Trade Zone,” The Wall Street Journal, June 10, 2015; “Trade Within Africa: Tear Down These Walls,” The Economist, February 27, 2016; John Aglionby, “Africa Looks to Boost Growth and Jobs with Free Trade Area,” Financial Times, December 1, 2016.

Case Discussion Questions
1. Why are African countries more likely to trade with Europe and America than they are with each other?
2. What are the likely gains from trade to be had from TFTA if it is fully implemented as a common market?
3. Why do you think free trade areas established so far in Africa have not lived up to their expectations?
4. What will African countries need to do to make the TFTA a success? What are the likely impediments to doing this?