Welfare Implications of COMESA-EAC-SADC Tripartite Free Trade Area

Abstract

This study investigated the extent to which the implementation of the COMESA-EAC-SADC tripartite free trade area (T-FTA) will impact on the 26 participating member countries. The impact analysis was done with respect to welfare implications. The World Integrated Trade Solution (2011), the Software for Market Analysis and Restrictions on Trade (WITS-SMART) approaches were employed for the research. The findings were that close to $2 billion worth of new trade will be created, with the main beneficiaries being DRC and Angola. Around $454 million trade will be diverted resulting in a positive net trade of $1.5 billion across the 26 countries. The results also suggest that around $1 billion revenue will be lost following removal of import duties.

Assessing marginal, threshold, and net effects of financial globalisation on financial development in Africa

“…Externalities of globalisation have been substantially documented in recent African development literature, inter alia: (i) the welfare (Makochekanwa, 2014), growth (KummerNoormamode, 2014;Tumwebaze & Ijjo, 2015), employment (Anyanwu, 2014;Foster-McGregor et al, 2015) and trade (Shuaibu, 2015) implications of growing openness and (ii) reverse foreign direct investment (FDI) from Africa to Europe (Barros et al, 2014).…”

Financial Globalisation and Financial Development in Africa: Assessing Marginal, Threshold and Net Effects

“…Externalities of globalisation have been substantially documented in recent African development literature, inter alia: (i) the welfare (Makochekanwa, 2014), growth (KummerNoormamode, 2014;Tumwebaze & Ijjo, 2015), employment (Anyanwu, 2014;Foster-McGregor et al, 2015) and trade (Shuaibu, 2015) implications of growing openness; (ii) reverse foreign direct investment (FDI) from Africa to Europe (Barros et al, 2014) and (iii) financial implications of macroeconomic shocks (Nguena & Nanfosso, 2014).…”

Revenue, Trade and Welfare Effects Of the Comesa Free Trade Agreement on the Democratic Republic Of Congo

“…Although the Cape Verdean's imports from the EU are expected to increase, welfare gains are likely to decline as trade diversion outweighs trade creation (Onogwu and Arene, 2013). Makochekanwa (2014) examines the implementations of the COMESA-EAC-SADC tripartite free trade area (T-FTA) on the 26 member states using by using a partial equilibrium model based on SMART simulations. The results show that the T-FTA is expected to create around 2 billion US dollars worth of new trade for the 26 participating member countries, with Angola and DRC as the big winners.…”

“…Finally, the DRC's government depends heavily on tariff revenues. In the case of the DRC, customs duties contribute in the range of 50 percent to government revenue (Makochekanwa, 2014). Therefore, any reduction in tariff revenues will significantly reduce government revenue with a negative impact on the state budget.…”