Doing business in Africa, forthcoming changes

Africa has been considered as a notoriously difficult place to conduct business in. However, as a result of the drive by three regional trading groupings being the South African Development Community (“SADC“), the Common Market for Eastern and Southern Africa (“COMESA“) and the East African Community (“EAC“) regional integration will be deepened.

SADC, COMESA and EAC are aiming to create a free trade area with 26 Members States from Egypt to South Africa termed the COMESA-EAC-SADC Tripartite Free Trade Area.

The COMESA-EAC-SADC Tripartite Free Trade Area is creating a customs union which will include the elimination of both tariff and non-tariff barriers for substantially all traded goods. Member States of the COMESA-EAC-SADC Tripartite Free Trade Area will have to harmonise their customs procedures and trade facilitation measures (such as standards, sanitary and phyto-sanitary measures and rules of origin). However, its aims are much more ambitious than ensuring free movement of goods within the free trade area. It is also envisaged that the free trade area will guarantee the free movement of services and business persons as well as the facilitation of cross-border investment.

It is expected that these priority services will be services that facilitate trade in goods. Typically these include communication, construction, energy-related, financial, tourism and transport services. Thus service providers in the region stand to benefit substantially from gaining access to foreign markets from which they have, by and large, been prohibited from rendering their services with legal certainty.

In addition the COMESA-EAC-SADC Tripartite Free Trade Area will eventually have harmonised competition laws. As such Member States will have to ban any prohibited practices which may affect trade between Tripartite Member States or has as its object the prevention, restriction or distortion of competition within the Tripartite Region. The current draft Annex on Competition Policy and Consumer Protection contains details on prohibited abuse of dominance as well as prohibited practices between other players in the Tripartite Region which may for instance have price fixing or market allocation as its objectives.

Mergers within the Tripartite Region will also have to be notified to the established authorities in a bid to gain insight into the competitive landscape within the region. Further consumer protection measures are also contemplated in the draft Annex and Member States will have to establish working bureaus of standards or Standards, Metrology Conformity Assessment and Accreditation structures, which will verify the quantity, quality, nature or value of the goods traded within the Tripartite Region.

A highly successful Second Tripartite Summit took place on 12 June 2011, in Sandton in South Africa. Attended by 12 Heads of State, three Vice Presidents, and 10 Plenipotentiaries, the Summit formally launched the negotiations for a COMESA-EAC-SADC Tripartite Free Trade Area and promised that the Tripartite Free Trade Agreement will be ready for adoption in the 2012.


30 November 2011