How to break the colonial legacy of exporting goods ‘overseas’ and raise the level of trade between African countries? This has been an issue the African Union (AU) has grappled with since it devoted its January 2012 summit to the issue of ‘Intra-African trade’.
The annual Economic Development in Africa report by the United Nations Conference on Trade and Development (UNCTAD) launched in Ethiopia last Friday, 11 July 2013, gives interesting answers to some of the questions African governments and the AU have been asking.
African governments are increasingly aware that socio-economic development is an essential pillar of securing a peaceful and stable continent. Former Ethiopian Prime Minister Meles Zenawi often spoke about the pursuit of greater cooperation among African countries in this regard.
During last year’s debate at the AU summit in Addis Ababa, he reprimanded his peers for being too short sighted. One couldn’t simply scrap tariffs and speed up bureaucracy at border posts to ensure intra-African trade, he believed. If every country in East Africa produced ‘tea and coffee’ why would they export to one another, he asked. Zenawi and a number of other heads of state also complained at that debate that the AU’s plans for creating a continental free trade area in 2017 was, at best, unrealistic.
Intra-African trade – which is linked to greater regional cooperation and stability – has become quite a buzz word in Africa since it was pointed out that only 11% of Africa’s trade is within the continent, compared to Asia, where 50% of total trade is between countries in the region. African governments have, over the last number of years, taken up the challenge and announced ambitious plans for mega continental infrastructure projects, development corridors and free trade areas – a continental integration seen as one of the essential drivers of African development.
But UNCTAD says this is not enough. In its report entitled ‘Intra-African trade: unlocking private sector dynamism’, it calls on the AU to make a ‘paradigm shift’ and for governments to let go of plans that have become outdated in a globalised environment. They should instead look at new notions like a ‘developmental regionalism’ built around value chains, be more realistic and face the fact that it is actually the private sector that imports and exports and not government institutions. The advice to governments is also to look at outcomes rather than only removing barriers to trade.
UNCTAD does acknowledge that lifting tariffs within Regional Economic Communities (RECs) and one-stop border posts are good steps towards improving intra-African trade. However, many discrepancies remain.
How can it be that, for example, an Ethiopian company exporting to Tunisia faces tariffs of up to 50% on average while a Tunisian exporter to Ethiopia faces a protection rate of 16%? A Moroccan exporting to Nigeria faces an average protection rate of 66% while a Nigerian exporting to Morocco faces an average protection rate of 18%, the report states.
Too many external trade agreements taking advantage of colonial trade patterns are another potential obstacle to intra-African trade. UNCTAD praises AU Commission chairperson Dr Nkosazana Dlamini-Zuma for announcing a moratorium on external trade agreements at the AU’s January 2013 summit. ‘This is a step in the right direction and should be welcomed and supported by development partners,’ it says.
In this debate, figures can be misleading. According to the report, intra-African trade as a share of African world trade declined to a low of 11% in 2011, compared to 22% in 1997.
However, it acknowledges that much of this is because of the surge in African trade with the rest of the world, which grew at 12% per year. The report is also based only on official figures. ‘Substantial and thriving informal trade in Africa is an indication that intra-African trade is not as low as official statistics suggest,’ it warns.
Institute of Security Studies
