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Africa's free trade deal: Exactly what the continent’s traders need

Does the signing of the African Continental Free Trade Agreement mean that Africa is ready for it?

The African Heads of States and Governments pose during African Union (AU) Summit for the agreement to establish the African Continental Free Trade Area in Kigali, Rwanda, on 21 March 2018. Picture: AFP

China has been Africa's largest trading partner since 2009 and has poured billions of rands into the continent – and will further expand its hold with the promise of more to come. And while China denies the accusations of using debt-trap diplomacy, the perception that China’s engagement with emerging African markets is pushing the continent into a debt trap is not entirely unfounded.

Vinod Madhavan, group head: trade at Standard Bank Group, says the solution to Africa’s trade and debt dependency on China is to ensure that African countries enter into relationships with China as an equal, knowing fully why they are borrowing.

But does signing the African Continental Free Trade Agreement mean that Africa is ready for it? The short answer is yes and, this is evident in the speed at which the 54 African nations have approved it.

In realisation of this movement – and to win the hearts of African traders - China has changed its approach from being an export-led country to increasing imports and focusing on buying a higher percentage of goods from the rest of the world.

They are realising that it's about other economies and, we as a nation, we ought to seize the opportunity.

Vinod Madhavan, group head: trade - Standard Bank Group

In light of the global slowdown in trade, this approach is good for Africa. By implementing the trade agreement, Africa is proving to China and itself that it can foster better trade relationships and trade among its countries.

To support this, the increasing use of disruptive technologies as a mechanism to find new markets aids the process and makes it easier for the flower seller in Kenya, for example, to find a market in another part of Africa.

Click here to read more from the Driving Africa’s Development archive.

Click here to return to the 54 and 1 portal - brought to you by Standard Bank.

Listen to the full conversation between EWN's WEF Africa correspondent Arabile Gumede and Vinod Madhavan, group head: trade - Standard Bank Group below.

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