UNCTAD – Africa ‘ignores its trade deals’

July 13, 2013 — 1 Comment
Cars and trucks at the South African border at Musina, Limpopo, queue to cross into Zimbabwe. The Unctad report says there are traditional transport routes in Africa - Photo: Motshwari Mofokeng.

Cars and trucks at the South African border at Musina, Limpopo, queue to cross into Zimbabwe. The Unctad report says there are traditional transport routes in Africa – Photo: Motshwari Mofokeng.

An official in the UN Conference on Trade and Development (Unctad), complains that Africa’s leaders repeatedly sign trade agreements and fail to implement them. Launching the organisation’s 2013 Africa development report in Johannesburg, Patrick Osakwe said leaders should set more realistic targets and “do more serious research” on the viability of the agreements.

Intra-African trade represents only about 11 percent of Africa’s total trade with the world, despite official commitments to improve the flows. Osakwe cited the case of the regional industrial policy adopted by the Economic Community of West African States in June 2010, which “has yet to be fully implemented”.

In June 2011 President Jacob Zuma announced talks on a 26-nation free trade agreement between three existing trading blocs, including the Southern African Development Community, of which South Africa is a member. Experts greeted the proposal with scepticism, noting a long history of leaders signing commitments to free trade or regional integration, but failing to follow through.

The Unctad report, which was launched simultaneously in Geneva and in centres in Africa, said development should be seen in a regional context: co-operation among countries in a broader range of areas than just trade and trade facilitation. It should include investment, research and development, and regional infrastructure development.

The report cited the Maputo Development Corridor linking Gauteng to the port of Maputo as “a successful, true transport corridor that has unlocked landlocked provinces in one of the most highly industrialised and productive regions of southern Africa”.

It said: “There are currently more than 20 corridors in operation in Africa but most tend to be traditional transport corridors. There is a need to move beyond that and to create industrial development corridors as well.

The report focused on intra-African trade and urged governments to unlock the private sector’s potential so that they could successfully diversify their economies. Most African countries are heavily dependent on commodities to grow their economies.

Africa accounts for only 1 percent of global manufacturing, and manufacturing represents only about 10 percent of African gross domestic product, compared with 35 percent for east Asia and the Pacific, and 16 percent for Latin America and the Caribbean.

The share of manufacturing in intra-African trade fell from about 54 percent between 1996 and 2000 to 43 percent between 2007 and 2011, as the value of commodity exports soared.

The report identified a major challenge to expanding the manufacturing sector. The average manufacturing company in sub-Saharan Africa has 47 employees, compared with 171 in Malaysia, 195 in Vietnam and 393 in Thailand. The small size of the operations prevents businesses from achieving economies of scale.

Other barriers were weak linkages between small and large firms, a high share of informal firms, low levels of export competitiveness and a lack of innovation capability. Transport costs were also prohibitive. “In central Africa, transporting 1 ton of goods from Douala in Cameroon to N’Djamena in Chad costs $0.11 (R1.10) per kilometre, more than twice the cost in western Europe and more than five times the cost in Pakistan.” Source: www.iol.co.za

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One response to UNCTAD – Africa ‘ignores its trade deals’

  1. 

    The Maputo Corridor suffers daily from the failure to follow through with regional agreements. Despite being cited as a ‘true transport corridor’ in this report, the corridor has yet to have a 2007 Heads of State agreement on a 24 Hour One Stop Border Post implemented, which is the single biggest factor inhibiting the potential economic growth, efficiency and predictability of trade and investment on the Maputo Corridor being realised. It is a prime example of how the failure to follow through on agreements inhibits economic growth, investment, industrialisation, growth and job creation in a region with dire poverty and joblessness. The lack of seriousness with which the South African government, in particular, regards this matter, is profoundly worrying and begs the questions of its integrity in committing to regional agreements. It is time for the real challenges on the ground to be given the gravity they deserve.

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