Lee-Roy Chetty
Lee-Roy Chetty

Regional trade can boost Africa’s growth, jobs

There is strong consensus that regional integration is indispensable in promoting intra-African trade especially with a large African market of one billion consumers, which can be a powerful engine for growth and employment.

Despite the underlying market potential for both cross-border and export trade, the volumes and values of the goods traded in the regional and export markets remain low.

According to the African Development Bank, in 2009, while Africa’s contribution to global trade stood at about 3%, intra-African trade was measured at approximately 10% of the continent’s total trade compared to 40% in North America and 60% with Europe respectively.

Inferior infrastructure and institutional barriers are some of the reasons impeding African countries to exploit their comparative advantage and strengthen their economic linkages.

But variables such as existing barriers, tariff as well as non-tariff, constitute the major inhibitors of the movement of goods and services across countries in Africa.

There is no doubt that facilitating trade through appropriate measures should maintain a good deal of export dynamism for African countries to ascertain their engagement in an ever globalising world.

Potential strategies to improve the potential gains from trade liberalisation, which would focus on export promotion policies as a means to expand export trade in combination with finding new products that could be introduced to the markets.

In addition, the role of technology and information and communications technology (ICT) in trade facilitation and customs modernisation to increase effectiveness and transparency can also be a focus in policy discussions as it could potentially increase the maximisation of flow of goods.

Moreover, ICT facilitates business transactions within the countries as well as provides linkages with other chamber of commerce and markets abroad.

Further policy discussions around the export processes and the single window system (SWS), which is geared towards promoting exports through creating smooth process channels that are time-efficient, cost-effective, predictable and reliable but on the premise that all government agencies are working in tandem.

Other policy recommendations could include:

— A renewed focus on the strong need for political will and commitment in creating and implementing policies that will promote trade facilitation and export promotion, both at the local and regional levels.
— African countries must place more importance on research and development, and take a proactive approach in taking advantage of all available related resources, both financial and technical/human.
— Addressing the skills shortage and lack of technical know-how, both at the private and public-sector levels. There needs to be a focus on human development through taking advantage of technical assistance opportunities offered by various development agencies around the world.
— In order to formulate policies that are effective and sustainable, the needs and rights of all stakeholders must be taken into consideration and have a direct effect on policy.
— Harmonisation is needed between national agendas and regional economic partnerships, at both the regional and continental levels. Sub-regional coordination mechanisms can help in creating and promoting connectivity.
— Feasibility studies are important when considering the implementation of systems such as ICT and SWS to ensure that investment on initiatives is not wasted. In addition, it is helpful to take from the experiences of other countries in the region that are implementing these systems.
— There is a need for African nations to concentrate on diversification of product to increase competitiveness in the region as well as in the international market.

It is clear that governments of countries on the African continent require a policy rethink when it comes to improving levels of export and trade facilitation to ensure that the continent remains competitive within the global market place and removes as many hindrances and red tape, which stands in the way of trade facilitation on the continent.

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