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Africa: Intra-African Trade,Avenue for Wealth Creation

         Date: 2012-07-16

           Tag: African Trade, Intra-African Trade

Summary: Efforts by African countries to fast-track trade amongst themselves have been on the front burner for several years, yet not much success has been recorded as multiple road blocks, harsh trade polic…

Efforts by African countries to fast-track trade amongst themselves have been on the front burner for several years, yet not much success has been recorded as multiple road blocks, harsh trade policies and political crises in some parts of the continent have hindered the realisation of a hitch-free trade on the continent.

These efforts started as far back as the 1960s which gave birth to the Economic Community of West African States (ECOWAS) with the sole objective to boost economic relations among member countries.

Other objectives of ECOWAS included promoting co-operation and integration in socio-economic and cultural activities, ultimately leading to the establishment of an economic and monetary union through the total integration of the national economies of member states.

It also aims to raise the living standards of its peoples, maintain and enhance economic stability, foster relations among member states and contribute to the progress and development of the African continent. ECOWAS integration policies and programmes are influenced by the prevailing economic conditions in its member countries, the need to take the principal provisions of the AEC Treaty into account, and relevant developments on the international scene.

However, years after this treaty, African countries have yet to improve on its intra-Africa skills as the World Bank Director of Poverty Reduction and Economic Management, African Region, Mr. Marcelo Giugale, expressed concern at the low level of trade among countries in Africa.

He said: "Africa has been very successful in integrating itself with the rest of the world, but it has not been successful in integrating countries in the continent. The commodity trade has made Africa to integrate with virtually every region of the world, but in terms of trade among countries in the continent, Africa has really failed.

"The fragmentation of Africa in terms of trade is dramatic and is resulting in the loss of billions of dollars of Gross Domestic Products (GDPs) and millions of jobs that ought to have been created.

"This is a self-inflicted wound. As you can see, agricultural trade among African countries is yet to start. That is one sector that will generate a lot of employment and a lot of social input.

"You certainly need much more than the GDP numbers going up. The translation from growth to employment is complex as it depends on labour market, skills, infrastructure and quality of the business environment. Growth can be very fast and you still don't see poverty reducing. Also, growth is a necessary, but not sufficient condition that poverty will fall," Giugale said.

Recently, African Regional Organisation for Standardisation (ARSO) and the Standards Organisation of Nigeria (SON) made the move to boost trade among African countries through harmonisation of standards.

At an event organised by the two standards bodies in Lagos, Dr. Kioko Mang'Eli, ARSO president, and Dr. Joseph Odumodu, SON director-general, told journalists that "trade among African countries is abysmally low and we need to facilitate more trade among African countries.

"We are saying, Africa can stop buying substandard goods coming into the continent from Asian countries by harmonising the issues of standard, conformity assessment that are in place and making them more useful to their countries.

And there is need to severe bilateral ties with countries that bring those goods by not accepting to do business with them. We ought to be doing business with countries that are friendlier in trade agreement," said Kioko.

He called on African governments to support standards bodies so that they can come up with conformity regime that can stop counterfeit products from coming into their countries.

Kioko observed that current standards and conformity regimes are not geared towards unity and development of Africa, although the African Union (AU) says they want to do integration of our economy, in terms of common currency and tariff."

SON director general noted that "Africans are not trading with each other. I can tell you, if Africans are trading with each other, it is cheaper and more efficient. We need to build the African continent in terms of our capacity; we need to reach out and build ourselves to the level of other continents of the world, and the only way we can do this is trading with each other."

Over the years, efforts were made by African countries to address the lack of intra-African trades, and the Kenyan President and current Chair of the EAC Heads of State Summit, H.E. Mwai Kibaki, while contributing at the 18th African Union Summit, Boosting Intra-African Trade at the AU Headquarters in Addis Ababa, Ethiopia, noted that the current level of trade within Africa remains too low compared to other regions and therefore said it was imperative to review the achievements so far made and chart the way forward for increased trade.

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