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  July 10th, 2015 | Written by

East African Nations Form New Free Trade Zone

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  • Twenty-six African nations have created a new free trade zone.
  • A new African trade bloc has the potential to increase inta-Africa trade by 25 percent.
  • UN report: African governments have to create more space for the private sector to play an active role in integration.

Twenty-six African nations have created a free trade zone that spans the eastern half of the continent from Egypt to South Africa in an effort to increase the flow of goods through reduced tariffs and improved infrastructure.

According to observers, the new trade bloc is expected to act as a common market with a combined gross domestic product of $1.2 trillion with the potential to generate a 25 percent increase in each individual member country’s trade profile over the coming decade.

The agreement includes Egypt and South Africa, among Africa’s wealthiest countries, and some of its poorest including Mozambique and Burundi. The continent’s most powerful economy, Nigeria, located on the continent’s west coast, is not included in the new FTZ.

The new bloc replaces the Tripartite Free Trade Area, comprised of the East African Community, the Southern African Development Community and the overlapping Common Market for Eastern and Southern Africa.

According to a 2013 United Nations report, a lack of regional integration caused Africa to lag behind Asia and Europe in economic growth.

If African governments want to achieve their objective of boosting intra-African trade, the report said, “they have to create more space for the private sector to play an active role in the integration process.”