Intra-African trade needs strengthening

10 February 2013

au-adb-ecaThe Director of the Regional Integration, Infrastructure and Trade Division of the United Nations Economic Commission for Africa (ECA) – Stephen Karingi, has said that the future of African trade and infrastructure is looking bright.

Speaking at the 8th Session of the Committee on Trade, Regional Cooperation and Integration, Mr. Karingi said that, with effective implementation at regional and sub-regional levels, a ‘Continental Free Trade Area’, supported by strong infrastructural development, is possible.

The role of informal cross-border trade on the continent was a major theme in the Director’s opening statement to the ECA Committee.

He told delegates that: “informal trade tends to be invisible in mainstream trade statistics”.

Mr. Karingi went on to note that the ECA would be working to generate up-to-date statistics in this field, through research by its African Centre for Statistics.

Speaking on current trends on trade in Africa, Karingi stated that, “though intra-African trade is low (about 12 %), the composition of this trade tends to be more sophisticated in terms of trade in manufactured goods than is usually perceived”, amounting to 46%, relative to trade with the rest of the world.”

“Whilst intra-African trade in manufactured goods was relatively high, the amount of agricultural trade was low, at 15%. However, this was a trade area with potential… in Africa as a key driver of growth, trade, employment and poverty reduction.”

Mr. Karingi was optimistic about the direction of African trade, noting the decision of African Heads of State and Government to establish a Continental Free Trade Area by 2017.

This decision, he explained, was reached at the 18th Summit of the African Union in Addis Ababa in 2012 and was inspired by the empirical analysis jointly published by the ECA, African Development Bank and the African Union Commission on ‘Assessing Regional Integration in Africa”.

He added that this goal could only be achieved through affirmative action.

This affirmative action, the Director emphasized, would come in the form of countries mainstreaming trade and regional integration in their national development plans and policies; providing for implementation of the ‘Action Plan for Boosting Intra-African Trade’, as well as other similar initiatives, in national budgets.

It can also be achieved by ensuring that once these issues entered the arena of public policy, they were “rigorously followed through”.

Continental Free Trade Areas (FTAs) are effective and they have been, and are being implemented worldwide, he stressed, pointing to the Trans-Pacific Partnership as a good example.

To facilitate the development of a Continental FTA, Mr. Karingi stated that, rules of origin and trade facilitation instruments across Regional Economic Communities (RECs) had to be jointly harmonized by the AUC and AfDB.

The ECA is developing the 6th edition of the ‘Assessing Regional Integration in Africa (ARIA VI)’.

This publication will address areas of commonality and divergence in regional ‘Rules of Origin’, the difficulties and challenges countries face in their implementation, and will offer practical ways to harmonize them throughout Africa.

The successful establishment of a ‘Continental Free Trade Area in Africa (CFTA’) would lead to intra-African trade rising to 22% of total African Trade and, in line with similar efforts worldwide, would add approximately US$ 1 trillion to the global economy.

Upon publication, ARIA VI would be a useful resource to assist member states in “negotiations on rules of origin and related trade liberalization measures” which “include areas such as one stop border posts, single windows, integrated border management, and trade and business information.”

Speaking on important developments in infrastructure development on the continent, Mr. Karingi noted that the ‘Programme for Infrastructure Development in Africa (PIDA)’ has moved into implementation stage.

It was adopted at the 18th Ordinary Assembly of Head of State and Government, in Addis Ababa this January.

The PIDA Working Group, of which the ECA is a co-chair, is geared towards creating effective policy frameworks, which would facilitate cross-border infrastructure development.

A core goal of PIDA, he said, was to address “the need to make greater strides in Africa’s transport networks, towards advancing intra-Africa trade as well as regional integration.”

Key to African economic development is the mining industry and the need for greater integration in this area.

Mr. Karingi announced that plans for the establishment of the African Minerals Development Centre (AMDC) at the ECA headquarters in Addis Ababa were on track and would be completed by the third quarter of 2013.

The Centre would support the attainment of the African Mining Vision, which in short, he said “is aiming at placing Africa’s rich mineral resource endowments at the centre of its economic transformation and poverty eradication.”

Mr. Karingi concluded his statement optimistically, saying that now was the “African Moment”.

In cooperation with “inter-governmental organizations, regional institutions and development partners”, Africa has a future “imbued with hope and remarkable growth and opportunities for transformative development.”

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