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Africa, Chinese ties should boost trade zones , Don

Prof. Olu Ajakaiye, Research Director of Nairobi-based, African Economic Research Consortium (AERC) , has called on African countries to exploit the existing China-Africa Trade relations to establish trade zones.

Ajakaiye also spoke of the need to forge economic cooperation zones by taking advantage of the trade relations between the two continents.

In a paper presented at an International Conference on China-Africa Economic Relations in Addis Ababa, on Wednesday, Ajakaiye said African countries should secure the support of Chinese authorities to encourage structured partnerships between African countries and Chinese firms.

He said that African countries should also utilise the existing trade relations to support their local entrepreneurs and to develop capacity by participating in the Chinese production sharing networks and also partner with the Chinese production networks to boost local production.

Ajakaiye said the continent should stabilise foreign exchange inflows thereby maintaining macroeconomic stability and competitiveness, implement export promotion policies and programmes necessary to retain competitiveness of manufactured exports.

He said that Africa”s overriding challenge remained how to secure high, sustained and pro-poor growth with attendant economic and social transformations and upgrading of technology. The AERC director also advised African countries to pursue outward oriented development strategy through the promotion of export led growth and take advantage of the market access provided through various preferential trade arrangements.

“African countries should also eliminate supply constraints through increased investment in infrastructure and the people, and the consequences of lack of technological modernisation to meet increasingly stringent global production standards and remain competitive,” he said.

According to him, for African countries to survive the trade relations, they must escape from commodity trap deepened by the recently aborted natural resource boom and compromised economic diversification and increased vulnerability to various shocks.

Ajakaiye said that there was a need to carefully and continuously identify and analyse the key features of China-Africa economic relations if African countries were to maximise the positive effects of the opportunities and ameliorate impacts of the challenges. He said that the strategies proposed should take account of the changing circumstances of the individual countries and the changing nature of the impact of China.

Ajakaiye said that Africa’s total merchandise to China increased about six fold from 4.5 billion dollars in 2000 to 28.8 billion dollars in 2006 with African export to China increasing faster compared to exports to the rest of the world.

But Africa’s share in China’s total import remained relatively small at 3.6 per cent in 2006. “China is now Africa”s third largest export market destination, after the U.S. and the EU accounting for 16 per cent of total exports in 2006. Africa’s aggregate imports from China increased from 6.5 billion dollars in 2000 to 26.7 billion dollars in 2006,” News Agency of Nigeria (NAN) correspondent in Addis Ababa quotes him as saying.

He said that Africa”s terms of trade in relation to China improved by 80 per cent to 90 per cent between 2001 and 2006, primarily because of rising world prices for oil and minerals exported to China in the face of stagnant or falling prices of manufactured goods imported from China.

Ajakaiye said that China”s imports from Africa in 2006 was dominated by fuels which accounted for 73.3 per cent, while ores and other minerals accounted for 8.0 per cent, agricultural products 6.8 per cent and manufactures good accounted for 6.5 per cent.

He said that during the same period, Africa’s import from China was dominated by manufactured goods, which accounted for 93. 4 per cent of the trade, with the major constituents being machinery and equipment 36 per cent, while textiles and clothing accounted for 25 per cent.


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