The 12 Trans-Pacific Partnership (TPP) signatory nations have a collective population of about 800 million and already account for 40% of world trade. The TPP together with the Transatlantic Trade and Investment Partnership (TTIP), the proposed trade agreement between the EU and the US still under negotiation, will cover most of the world's economy, about three quarters of trade on a global basis. This scenario may not involve Africa, but it still comes with abundant significance. The importance of the TPP right now for Africa is the indication of the need for a general climate for free trade, which eventually Africa can play along with.
The International Centre for Trade and Sustainable Development says that in the last 20 years, trade has become a significant issue "on the agenda" of almost all African states, with its potential for economic growth recognized by both the public and private sectors. Today's reality is that business is increasingly global and cross-border. Going by the numbers, Africa's total share of global trade is relatively small, about 2%. But for many individual African countries, world trade plays a major role, representing more than half of GDP, according to the German Institute for International and Security Affairs (SWP). Since the early 1990s, many countries in Africa have made significant progress in opening up their economies to external competition through trade and exchange rate liberalization, often in the context of IMF or World Bank support programs. Nearly all African states are members of the World Trade Organization (WTO).
While historically Africa has been a supplier of basic commodities and raw materials, that scenario is changing. Africa has a population of a billion people, a growing middle class and an increasing appetite for consumer goods. The US in fact recognized Africa's significance in 2014, when President Obama invited African heads of state to Washington for the first US - African Leaders Summit. In 2015, foreign direct investment in Africa totaled some $73.5 billion, SWP says, with more investment directed toward consumer goods and services to meet the needs of the continent's burgeoning middle class.
A flourishing services sector is sparking economic expansion in many African nations, offering great potential for Africa's trade diversification and growth, according to the World Bank. Services also facilitate the production of important exports and food staples, the World Bank says.
While there are currently some 30 regional trade agreements or trade blocs on the continent, Africa is now working on its own free trade agreement that will include all 54 African nations. The Continental Free Trade Agreement (CTFA), agreed to by all African heads of state in 2012 and targeted for implementation in 2017, will create the largest free-trade area in the world, by number of countries. It will establish a single market with an estimated 2 billion people by 2020 and a gross domestic product of more than $3 trillion.
The CTFA has enormous potential for economic development and job creation in Africa. It could boost trade between African countries by some $35 billion, an increase of 50%, estimates the United Nations Economic Commission for Africa. By bringing down barriers among 54 different nations to create one unified market, it will also strengthen Africa's appeal as a global trading partner.
But the world needs to be open for business. For most countries, history has shown that trade contributes significantly to economic development. That forecast needs to be bright for Africa to grow in the 21st Century and to take its place on the world stage.
Zandre Campos is chairman and CEO of ABO Capital, an international investment firm that invests in companies in the healthcare, energy, transportation, technology hospitality, and real estate sectors. ABO's mission is to create global value for developing countries in Africa, while contributing to their economic development.