Enhancing Intra-African Trade

Published on 22nd June 2010

Africa has made good progress over the past 10 years. Since the turn of the Century, conflicts have reduced and on the economic and social front, our member States have made and continue to make tremendous efforts to achieve sustained economic growth. Indeed, in recent times, Africa has improved in growth rates and on economic fundamentals such as low inflation, better public finance management, and improved tax systems and administration. However, despite the progress made on growth rates, averaging about 4%, we still need to do more to lift people out of poverty.

On trade and regional integration, through regional integration, countries can benefit from larger markets, and increase their bargaining power and visibility in international negotiations. The imperative for regional integration in Africa is particularly strong due to the size, structure and low level of development of many of the economies of our continent. We are currently witnessing a number of positive trends with respect to Africa’s integration.  Free movement of people is taking root with some regional economic communities such as ECOWAS far advanced through the institution  of a common ECOWAS passport. Barriers to trade are being dismantled through Free Trade Areas, and trade facilitation measures such as simplification of customs procedures and one-stop border posts. Energy pooling is increasing availability of energy for productivity and private consumption. An excellent example is the SADC Power Pool, and the pursuit of the gas pipeline project in ECOWAS. Countries are pooling efforts to promote peace and security.

Similarly, physical connectivity has advanced in many areas, and inter-State road transport has improved in many parts of our continent. With the Yamoussoukro Decision on Air transport liberalization, a foundation was laid for making some headway in terms of flexibility in the granting of traffic rights, and opening the air space for more competition and more choice for air travelers, and in deed strengthening the African Airline Industry in general. All these initiatives have been made possible because of Africa’s relentless efforts to gradually integrate its economies.

Nevertheless, we still have a number of hurdles to clear to reach the ultimate goal of the African Union, not least of which is improving on intra-African trade. On intra-African trade, the balance sheet is not very encouraging.  A number of reasons underpin this assessment. Africa continues to face systemic difficulties rooted in supply-side constraints, infra-structural bottlenecks and lacks many of the prerequisites that facilitate trade internally and externally. We need to overcome these constraints through deliberate efforts to mainstream trade policies in national development strategies. It is crucial because trade is an important driver of economic growth, and a source of finance and rising prosperity.

If you look at the vibrant economies of Asia today, they trade and compete ferociously in both regional and global markets in manufactured goods. Dependence on raw material exports limits opportunities to reap the benefits of both African and global markets in value-added manufactures. That is why we established the African Trade Policy Centre, with significant support from the Government of Canada, to help build capacity, knowledge and expertise of African trade policy experts and negotiators on trade and trade-related issues.

Assessing Regional Integration in Africa (ARIA) is a joint-publication of the Economic Commission for Africa (ECA), the African Union Commission and the African Development Bank. It is aimed at assessing topical issues in Africa’s integration and tries to fulfil the need for comprehensive and empirical analysis and rigour in looking at the progress being made towards integration in Africa.

The publication throws out some findings and issues and provides a total picture that otherwise could not be readily and easily available elsewhere in a single document. As the African Union dispensation gathers momentum, such a report comes handy in helping to shape the future of integration in Africa.  To this end, it has put across a number of prerequisites for attention by African leaders and their motley of institutions in order to make the African Union a living reality. Furthermore, almost all stakeholders, ranging from governments to the private sector, can use the report as a data base to know what is happening on integration in Africa, and also use it as a framework for shaping policy and support towards advancing the continent’s integration process.

The first edition of ARIA, which was published in May 2004, was a landmark assessment of the status of regional integration in Africa. Subsequent ARIA publications have tried to address critical thematic challenges.  ARIA II examined and made recommendations on the issue of rationalization of the multiple integration groupings in Africa and their attendant overlapping memberships. ARIA III addressed macro-economic policy convergence, monetary and financial integration in RECs. ARIA IV focused on the theme of enhancing intra-African trade, which continues to remain a key challenge in Africa’s integration process.

On average over the past decades, intra-African trade has hovered around 10-12 percent of Africa’s total trade.  To put this in perspective, 40% of North American trade is with other North American countries, and 63% of trade by countries in Western Europe is with other Western European nations. Low intra-African trade implies that many opportunities are lost for using trade within the continent to enhance the prospects for specialization among African countries and accelerated development and integration.  The potential has been overlooked for Africans to trade with their neighbours notwithstanding their geographical proximity. The situation raises serious questions: (i) Why is the level of intra-African trade low? and (ii) How can the situation be reversed so that African countries can benefit from intra-regional trade?

ARIA IV attempts to answer these questions through rigorous analysis to determine the reasons why intra-African trade has remained consistently low over the past decades and come up with concrete proposals that can be implemented by member States, Regional Economic Communities, private sector operators and other stakeholders in Africa’s development, in order to address the challenges of intra-African trade.

In ARIA IV, one finds a publication rich in information, statistics and analysis on the burning issue of intra-African trade, including the nature and scope of trade in the informal economy as well as the gender dimensions of intra-African trade.  We wish to invite our Member States to take ownership of this publication. It is their publication, their guidebook and toolkit for advancing regional integration and intra-African trade in this beautiful and bountiful continent of Africa.

By Abdoulie Janneh

United Nations Under-Secretary General and ECA Executive Secretary
Excerpted from his address at the Seminar for Ambassadors and Representatives of International Organizations on ARIA IV: Enhancing Intra-African Trade in Addis Ababa, Ethiopia.

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