Unlocking Africa: UNCTAD report’s new findings and recommendations

The United Nations Conference on Trade and Development (UNCTAD) has made a number of recommendations regarding inter-regional trade in Africa in its Inter-AfricanTrade: Unlocking Private Sector Dynamism report.

When Dr Patrick Osakwe, chief of UNCTAD’s African Section, presented the report to the media, he indicated that the 2013 version is taking a more linear approach to regional operations, unlike the previously-attempted “textbook” approach, which to date has been unsuccessful.

According to the report, the share total of intra-Africa trade dropped from 22.4% in 1997 to 11.3% in 2011. Imports and exports in 2011 totalled $130.1bn.
It identified the main hurdles to promoting inter-regional trade in Africa as:
•    The lack of formal policies between various governments with regard to trade agreements.
•    The high levels of informal trade resulting in small-scale firms being unable to provide to or compete with international peers.
•    Weak inter-firm linkages that make it hard for local firms to form joint ventures.
•    Lack of infrastructure and technology.
“Easing trade barriers between the continent’s countries through binding agreements from the numerous heads of states is the first step. If the agreements already exist, we suggest immediate emphasis on implementation,” Osakwe stated. “It is also important to note that without the efforts by governments to increase the variety and sophistication of the goods that their economies produce, the elimination of trade barriers will not have the desired effect.”

Way forward
The report recommended that the “power houses of Africa” – South Africa, Nigeria, Egypt and Ghana – should invest more in regional trade, in order to increase trade agreements.
Its other recommendations are an EU-like market scorecard to aid with the implementation of objectives as well as setting of realistic timelines, and the concurrent development of national and regional industrial policies to stimulate the development of regional industrial value chains in Africa. This, in turn, the report states, will offer African countries larger opportunities to trade more goods among themselves. The Economic Community of West African States (ECOWAS), for example, has a regional industrial policy which has yet to be fully implemented. One of its objectives is to promote local processing and the creation of value-added products in the sectors and sub-sectors where the region as a whole enjoys high comparative advantage – for instance, mining and the processing of agricultural products.
A further recommendation is for peace and to increase levels of security in the countries. “It is a known fact that trade drops immensely in conflict areas. Improving governance, strengthening mechanisms as well as conflict prevention will greatly increase the chances of better trade. The private sector will then also be willing to partake in private-public joint ventures,” Osakwe emphasized.
He contends that so far in Africa, governments have been the only active force for regional integration, while the private sector has remained a passive participant in the process. “There is a need to create mechanisms for constant dialogue between states and the private sector so that the problems and challenges faced by existing and prospective businesses are clear to governments and well co-ordinated plans can be established for dealing with them,” says Osakwe. “In Mauritius, for example, the Joint Economic Council, a co-ordinating body of the Mauritian private sector, meets on a regular basis with the government to discuss broad economic policies.”
Above all, UNCTAD’s new proposed holistic approach requires enhanced teamwork for inter-regional trade in Africa to be a success.
• The full report is available on www.unctad.org

A few interesting facts
•    Africa has some of the highest costs in the world for transporting goods. For instance, transporting one ton of goods along the route from Douala in Cameroon to N’Djamena in Chad costs $0.11 per kilometre.
•    African countries export a higher percentage of manufactured goods to each other (43% of all intra-Africa trade) than to overseas markets (14%).
•    African countries produce and export a narrow range of goods, mostly primary commodities such as oil, natural gas and metals.
•    There are currently more than 20 trade corridors in operation in Africa. One of the most successful ones is the Maputo Development Corridor linking Gauteng (South Africa) with Maputo (Mozambique).