AFRICAN leaders from three regional economic blocs are meeting in South Africa to discuss the formation of a free trade area.
The merger of the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) will bring together 26 states with a combined population of over 600 million people.
This huge market will no doubt have many economic benefits. It will foster free movement of labour and intra-regional trade as goods manufactured within the bloc would be freely transported across the borders tariff-free.
The free trade area will certainly be more attractive to big investors since it will now be marketed as a single bloc rather than individual states. It will also be politically good since the partner states will endeavor to ensure that peace and stability prevails to foster trade and investment across the region.
However, while the consumers will get a better deal, the local companies are likely to face stiff competition from more established and better-capilatised firms within the region.
The federation is coming and they are likely to be pushed out of the market unless they rethink their operations and business strategy.
To survive in the highly competitive market that will result, the Uganda Government and local businesses should decide now and focus only on areas where we have competitive advantage. For instance, Uganda has already curved itself as a regional centre of excellence in education. We also have great potential in tourism and agro-business. We could become a net exporter of electricity if all our power potential is harnessed.
Therefore, with strategic policy interventions, the formation of this trading bloc is a big blessing. We only need to refocus our business strategy.
Free trade area a big blessing