WORLD ECONOMY

Eswatini walking tightrope to become Africa's trade hub

Kingdom, formerly Swaziland, competing against some of the continent’s biggest economies to host AfCFTA Secretariat

News Service AA

The Kingdom of Eswatini in Southern Africa is walking a tightrope in its bid to become Africa's trade hub and is competing against some of the continent’s biggest economies to win hosting rights for the African Continental Free Trade Area (AfCFTA) Secretariat.

To mark the 50th anniversary of its independence from British rule last year, the kingdom, formerly known as Swaziland, shed its colonial name to become Eswatini. It is now positioning itself to become Africa's trade capital and is competing with Ghana, Egypt, Ethiopia and Kenya.

Ambrose Dlamini, the country's prime minister, tips the AfCFTA to be the world’s biggest trade body in terms of membership since the establishment of the World Trade Organization.

It intends to bring together all 55 African Union member states under a common trade banner. With a projected cumulative Gross Domestic Product (GDP) of US$3.4 trillion and a combined population of 1.2 billion inhabitants, the AfCFTA is earmarked to create a single market for Africa.

At a breakfast meeting with the local business community Wednesday, Dlamimi said he had no doubt that Eswatini stands a good chance of winning the hosting rights for the AfCFTA Secretariat.

“As a country, we have the advantage of having the best infrastructure and facilities in the continent and have been actively involved in the African trade revolution for many years.”

He further said that winning the bid would create demand for the establishment of new diplomatic missions and commercial offices as well as supportive bodies such as research institutions, think tanks, audit firms and travel agents.

“This is exactly where the business community comes in," he said, adding "hosting the AfCFTA Secretariat comes with a lot of opportunities for entrepreneurs across many sectors of business in Eswatini".

He said while the country awaits the arrival of the African Union’s evaluation team between May 10-12, there is a need to continue spreading the word among all Emaswati about the significance of the opportunity the country is presented with.

“I hope that when the evaluation team arrives, they will sample and appreciate the hospitality that Emaswati are known for and be convinced that, indeed, the kingdom is ready to host Africa.”

E. Nathi Dlamini, chairman of the African Continental Free Trade Area Steering Committee, echoed the prime minister’s comments, saying it would not only boost Eswatini’s reputation as a key team player in the African Union but would also expose the merits of Eswatini as a destination for foreign direct investment. Such benefits as well as those from the single market itself would dwarf the cost of providing the office and requisite residential accommodation that has been promised in the bid.

“Serving Africa in a manner that is also serving our own people has to be one of the most obvious win-wins of recent times. But there is no getting away from the fact that we are up against strong competition from other bidding countries,” he said.

Dlamini added that as a result, they have embarked on an extensive marketing program which entails domestic and external lobbying efforts.

He said a formal request to support the country's bid at the highest level has been made to Southern African Development Community (SADC) member states, and the response has been positive.

In the Common Market for Eastern and Southern Africa (COMESA), the team has noted that other members have also joined the bid such as Egypt, Ethiopia and Kenya, and therefore the committee is using a different approach in building its case for support.

The country is a member of the SADC and COMESA, and the team is confident that member countries in these two regions can support Eswatini.

“With our recognized positioning as a trade hub in the region and ranking first in Africa on trading across borders by the World Bank, any observer would recognize our communication and facilitation skills and our excellent positioning,” Dlamini said.

He noted that the country has a stable political environment and peace that adds the feather on the cap.

"This is what we eagerly desire to share with the rest of the African continent by hosting the secretariat of the African Free Trade Area. Our infrastructure is comparable with the largest economies in the continent, including our immediate neighbor, the Republic of South Africa. The energy sector is one of the rapidly growing sectors in the country, with more emphasis on renewable energy in line with our commitment to clean energy

"According to the International Telecommunication Union’s facts and figures for 2017, the proportion of youth [15-24] internet users and the population of youth, Eswatini was in the bracket of 60% to 80%. This figure has increased to above 80%. And our temperate and tropical climatic conditions provide a conducive and workable environment. Being a neighbor to both South Africa and Mozambique conveniently connects us with the rest of the continent and the globe," Dlamini said.

However, considering the fight for dominance by African superpowers which in turn trickles down to the regional economic communities, Dlamini said still Eswatini stands a chance because the secretariat of the African Continental Free Trade Area will be a pan-African institution.

In this regard, all the members of the African Union will have a collective ownership of this organ.

"To this end, Eswatini is respectfully seeking support from all the regions in the continent. Eswatini has warm, cordial, fraternal diplomatic relations with countries from West and North Africa, and it is on this basis that we are seeking their support," said Dlamini.

Gideon Chitanga, media expert, regional analyst and researcher at Political Economy Southern Africa (PESA), a South African-based research institution focusing on regional integration in Southern Africa, said big African countries will pursue a change of strategy. They will realign their interests to change their attitude in the way they relate to a Free Trade Area (FTA).

Chitanga said the big countries will be actually shifting from narrow-focused sovereign dominance and reluctance to join the AfCFTA and being aloof and will take a more continental-oriented approach where they compete in terms of their goods and services. There will be a system to compensate their losses among themselves and also compensate their losses with the smaller countries to make sure there is some kind of a win-win situation.

"There will be a major shift. They will sort of start to re-engineer their economies in a sense of wanting to be the major participants or major dominant players within the FTA.

"So my take is that the current reluctance aimed at the idea of sovereign dominance is informed by the desire to preserve the benefits dominating the regional institutions at the regional level where Nigeria dominates the Economic Community of West African States (ECOWAS), South Africa dominates the SADC and Kenya and Ethiopia in East Africa and so on. My prediction is that we shall see more cross-continental influence within the free trade area. The big countries will be able to produce more goods and have more sophisticated economies," he said.

Chitanga said there will be a serious contest among African countries to start to compete for the market niche because through the African Continental Free Trade Area, members will have the potential to access a bigger market and compete on a much bigger scale than they would if they were out of the FTA.

He noted that the AfCFTA will also help countries like Eswatini tap into the whole value chain of growing, production, processing, refining and creating jobs to boost their economies.

Chitanga said the idea of the African Continental Free Trade Area should be linked to capacitating and empowering and bringing efficiency to African countries to enhance their opportunities in those sectors of the economy in which they are strong in.

"Eswatini, for instance, exports raw sugar to international markets. Yet it must add value and process other products from sugar to benefit more. We are, however, looking for an AfCFTA that will capacitate these smaller countries to benefit from their products," he said.

In addition, Chitanga noted that the main problem Eswatini might want to deal with is its political system.

"My guess is that the kingdom will not host this institution without political scrutiny. We have seen it with Ethiopia when it wanted to host the African Union headquarters. I don't know if the Eswatini government has a plan for political reforms. Although other African countries don't want to openly criticize the kingdom, they might face pressure from donors supporting this free trade area movement," he said.

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