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AFRICA STILL GETS LESS THAN 3% OF GLOBAL TRADE AS INTRA-AFRICA TRADE FALTERS AT 10% Despite the fact that Africa is endowed with rich mineral resources as well as some of the world's highly prized cash crops like cocoa, coffee and tea, the continent's share in global trade and even trade among the continent's 53 countries is abysmal. By Emmanuel Dogbevi Africa’s share in the US$30 trillion global trade has remained a minimal 3% over the years and intra-Africa trade is a meager 10 percent. The Africa Trade Policy Centre (ATPC) of the United Nations Economic Commission for Africa (UNECA), recently organised the first ever Africa Trade Forum in Addis Ababa, to look at how Africa can trade itself out of poverty. According to the ATPC, despite the exponential increase in the volume as well as the value of goods and services traded across borders Africa's share in global trade continues to decline. Global trade (in current prices) has increased from $13 trillion in 2000 to an estimated $30 trillion in 2010, but Africa's share in world trade has been in decline since 1980 and currently stands at about three percent. The ATPC is however of the view that the experience of most developed countries and emerging economies points unequivocally to the significant role that trade has played in stimulating growth and enhancing economic development. It goes on to further argue that empirical evidence also suggests that trade, complemented by appropriate domestic policies and a supportive external environment, has been one of the most powerful catalysts for economic transformation in poor countries, including those in Africa, and yet African countries have not benefited from the steady increase in the volume of international trade. “The continent remains heavily dependent on the export of a few primary commodities, most of which until recently had suffered significant decline in prices over the years, leading to large trade losses and worsening balance of payments,” the ATPC says on its website. Dependence The dependence on the export of primary products has been noted as one of the reasons why Africa has not made much gains from global trade. African countries, therefore, are being encouraged to add value to their primary products to gain a competitive edge in global trade. Mr. Lamin Barrow, of the African Development Bank, commenting on the theme for the Forum “Accelerating Intra-African Trade and Enhancing Africa's Participation in Global Trade", said, borne out by the Assessing Regional Integration in Africa, (ARIA IV), a key remaining challenge for regional integration in Africa is the low level of trade within Africa, “which has many and far reaching implications for sustained growth and poverty reduction.” He indicated that stagnation of trade within Africa which is around 10% to 12% over the last decade, compares poorly with the levels achieved in other regions, which range from 72% in Europe, 52% in Asia, 48% in North America, 26% in Latin America and 16% in the Middle East. He argued that “the fact that this relatively poor performance has prevailed over the last decade strongly suggests that inadequate attention has been focused on improving Africa's competitiveness and participation in both the global and intra-African trade.” According to Mr. Barrow, the unfolding events in the Euro Zone and other emerging threats (both perceived and real) that might lead to a global economic slowdown provide a compelling urgency for further reflection to shape a new vision of Africa's economic diplomacy through enhanced intra-African trade and regional integration. He said while Africa might not come under immediate threat from the direct consequences of these challenges, the continent's reliance on primary commodity exports makes it impossible to escape the medium to long term impacts – ”the more reason we should boost intra-Africa trade.” The Ethiopian Minister of Industry, Mekonnen Manyazewal made the point that while trade matters, and can work for Africa's development and it is necessary, it is not sufficient. “Much more needs to happen for trade to serve as engine of growth and development.” He said one of the challenges facing Africa more than other developing regions is the fact that “Africa is heavily dependent on primary commodities as a source of export earnings and it is not able to increase agricultural productivity.” Imports In addition to the continent's very disadvantaged position in global trade, African countries are said to be importing about $50 billion worth of processed food and this amount is projected to reach $150 billion by 2030, according to Stephen Karingi of the Economic Commission for Africa (ECA). He gave some statistics that painted a gloomy picture of intra-Africa trade – he said out of every $100 that Africa uses to finance its development $80 comes from trade, however, only $8 of this amount comes from intra-Africa trade. “Africa has a negative trade balance on basic food, and chemicals, it is only for natural resources type of exports that Africa has a trade surplus. Africa imports about $50 billion worth of processed food and agriculture products,” he said. He said two out of every three African countries make it difficult for their neighbours to trade with them than they do with the rest of the world. “There are lots' of barriers, tariff and non-tariff,” Karingi said. He indicated that intra-Africa trade is being limited in its ability to help Africa finance its development and that is making it difficult for African countries to meet the Millennium Development Goals (MDGs). He therefore urged that the African market should be enlarged. According to him, the current average value of 10% intra-Africa trade can be increased if tariffs are removed, infrastructure is improved to make it possible for the easy movement of goods and the time involved in crossing borders is reduced. Integrating the continent's economy, and even currency, with a careful examination of the Euro-zone as a precaution towards a more workable monetary system, removing trade barriers, both tariff and non-tariff can set the tone to a more beneficial and economically sustainable intra-Africa trade that has the potential to boost the continent's economy. – Third World Network Features. -ends- About the writer: Emmanuel Dogbevi is editor of the online newspaper, www.ghanabusinessnews.com The above article is reproduced from the African Agenda, Vol 15 No. 1. When reproducing this feature, please credit Third World Network Features and (if applicable) the cooperating magazine or agency involved in the article, and give the byline. Please send us cuttings. And if reproduced on the internet, please send the web link where the article appears to twnet@po.jaring.my. 3805/12
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