Uganda has become the 15th member of the free trade area (FTA) established by the Common Market for Eastern and Southern Africa (Comesa).

Ugandan goods will now have a 0% tariff when exported to other signees, compared to the 2% levy on goods to and from non-member states.

Uganda’s trade minister Amelia Kyambadde predicts that the ascension will boost Ugandan exports by 50%.

Jorim Schraven, manager, financial institutions Africa at the Netherlands Development Finance Company (FMO) tells GTR that as well as raising exports, membership “should potentially help relieve any pressure on the current account”.

Schraven also sees the move as being beneficial for private investors outside of the region. He says: “Elevated costs of trade, ranging from financial trade barriers to non-financial trade barriers reduce the profitability of certain forms of investment. In particular, it tends to reduce profitability of forex earning projects which tend to be more likely of interest to foreign investors. As such, reducing trade barriers can enhance growth of dollar earning enterprises and ultimately impact positively on the willingness to invest.”

The other member states are Libya, Egypt, Sudan, Kenya, Rwanda, Burundi, Mauritius, Comoros, Zimbabwe, Zambia, Djibouti, Madagascar, Mauritius and Malawi. But with the Democratic Republic of Congo (DRC) and South Sudan being Uganda’s biggest trading partners, there’s speculation that they will be the next two states to be granted membership. Uganda was a founder member of Comesa in 1994, but until now it was excluded from the FTA.

Sub-Saharan Africa, which includes many of the FTA’s member states, has one of the strongest growth rates of all the world’s regions. Regional growth is expected to exceed 5% this year, with a middle class starting to emerge in many of the individual nations.

The opportunity for infrastructural development will continue to grow in line with these, and FMO’s Schraven sees plenty of opportunities for banks and lenders to get involved.

He tells GTR: “Clearly there is a great need for infrastructure in energy as well as oil and gas-related sectors, as well as transport. Local banks with access to long-term funding at competitive rates should have a competitive advantage to their peers in capitalising on this opportunity.

“In the Comesa region development banks play an important role in providing term funding, so banks that have the governance structures as well as credit skills in place to access such funding have an edge in the market.”