In its report, 'Doing Business, Trading Across Borders 2012',
the World Bank estimates that Africa trades with Africa at a level of
only 10 per cent compared to 60 per cent among Western European
countries.
For the purpose of enhancing economic growth, intra Africa trade must grow as in other regional blocs.
African leaders meeting in Addis Ababa for the
2012 African Union (AU) Conference endorsed the report by the African
trade minister’s conference in Accra, Ghana, in December 2011, which
envisaged a road map to establish a continental free trade area by 2017
and a customs union by 2019.
Although this was a critical step towards
realisation of advancing internal trade for economic development, there
is not much of action leading up to the deadline.
An American think tank group, Brookings Institute
says Intra-Africa trade can help the continent’s industries become more
competitive by creating economies of scale and weeding out producers
that are less productive in the market place.
It can establish and strengthen product value
chains and facilitate the transfer of technology and knowledge via
spill-over effects.
And it can incentivise and spur infrastructure
development and attract foreign direct investment. For these reasons,
expanding intra-African trade is a key to accelerating economic growth
on the continent.
Cut trade barriers
It is especially important for the continent’s
many small, landlocked countries that face tremendous challenges trading
internationally.
How are we to solve Africa’s problems? First Africa must deal with the challenges that stand in the way of trade.
These include tariffs, conflicting regional
integration initiatives, infrastructure, value addition to primary
products, internal conflicts, and enabling environment.
The most frustrating challenge to intra-African
trade is the burden of high tariffs, which is a barrier to trade. In
contrast with other parts of the world, African counties have the
highest tariffs with their neighbours.
Even with regional integration initiatives, tariffs continue to delay the processes of integration.
Multiple initiatives, such as the Common Market
for East and Southern Africa, the East African Community and the
Southern Africa Development Community with conflicting schemes too are
becoming major hindrance to effective trade integration that AU must
deal with.
How do we explain the fact that we export our
coffee and tea to Europe for our neighbouring countries import it from
you there at exorbitant prices?
Since the colonial period, Africa has not improved
or built new cross border infrastructure yet this is the life-blood of
the many land locked countries.
Game changers
To unlock the potential that lies in Africa’s
interior joint investment in infrastructure is critical. Initiatives
such as the Lamu Port Southern Sudan Ethiopia Transport corridor are
likely to become game changers in the region.
Ethiopia has come up with a transformational strategy to generate 10,000 MW of energy and sell to its neighbours.
The National Fibre Optic Broadband Infrastructure
in Kenya links to all its neighbours without any gateway. Every African
country should do the same.
With energy, broadband and a transport corridor,
value addition to primary products and other industries will naturally
emerge thus improving the potential for economic growth.
Africa’s internal conflicts though few compared to
during the Cold War, have become more complex. Internal conflict in
Somalia, for example, is not just a Somali issue but a global one.
Africa took far too long to intervene allowing the
conflict to take international dimensions. Conflict heavily impacts
ease of doing business not just with the country but within the
neighbouring countries too.
However, stable countries should create an enabling environment to doing business without being pushed.
Let us not be known for making great declarations
that do not have follow-up and implementation. AU must take a more
proactive role with greater power to punish non responsive countries.
Theirs should not be a public relations exercise anymore.
They must take a collective responsibility to
change Africa and see to it that tariffs are minimised, reduce confusion
with regional integration initiatives, support cross border
infrastructure, provide financial support to emerging industries, manage
internal conflicts before they get out of hand, and monitor ease of
doing business in each country.
Dr Ndemo is a former Kenyan Permanent Secretary for Information and a senior lecturer at University of Nairobi.
SOURCE: AFRICAN REVIEW
SOURCE: AFRICAN REVIEW
