By PROVIDENCE OBUH
A report released by the United Nations Conference on Trade and Development (UNCTAD) has shown that Trade within Africa reached $130.1 billion in 2011, representing 11.3 per cent with the world, just as share of intra-Africa trade in total trade remains low compared to other developing regions.
The report: Economic Development in Africa Report 2013 is subtitled “Intra-Africa Trade: Unlocking Private Sector Dynamism,” was presented at a press conference by Head of Department of Economics, University of Lagos, Mr. Ndubisi Nwokoma, and it focuses on how to strengthen the private sector to boost intra-African trade.
The report argues that for African countries to reap developmental gains from intra-African trade and regional integration, they will need to place the building of productive capacities and domestic entrepreneurship at the heart of the policy agenda for boosting intra-regional trade.
“The share of intra-Africa trade in total fell from 22.4 per cent in 1997 to 11.3 per cent in 2011. Intra-Africa trade (both exports and imports) totalled $130.1 billion in 2011. these statistics may be underestimates, given the prevalence of informal cross-border trade on the continent, but they are nevertheless low when compared to other parts of the world,” UNCTAD said.
The report shows that short-term unexploited opportunities for regional trade in Africa are to be found particularly in agriculture, also Africa has about 27 per cent of world’s arable land and that can be used to expand agricultural production, yet many countries on the continent import food and agricultural products from countries outside Africa.
“For the period from 2007 to 2011, 37 African countries were net food importers and 22 were net importers of agricultural raw materials, but only about 17 per cent of the continent’s world trade in food and live animals took place within Africa.
“The increase in the level of intra-African trade over the past decade has been accompanied by a decrease in its share of total African trade. The share of intra-African trade in total trade rose from 19.3 per cent in 1995, reached a peak of 22.4 per cent in 1997 and fell to 11.3 per cent in 2011. This decline was due to the fact that African trade with the rest of the world grew much faster than intra-African trade.”
The report further stated that in volume terms, five intra-African exports grew at an annual average rate of 2.6 per cent in the period from 2001 to 2006 and 3.2 per cent in the period from 2007 to 2011, while for intra-African imports, the real growth rates were 9.4 and 4.2 per cent respectively, in nominal terms, the level of intra-African trade was $32 billion in 2000 and $130 billion in 2011.
According to the report, “Most of the increase in the value of intra-African trade in the last decade was driven by price increases, while the value of intra-African trade rose by a factor of 4.1 from 2000 to 2011, in volume terms, it rose by only a factor of 1.7.
“As a share of the value of African world trade, intra-African trade rose steadily from 19.3 per cent in 1995, to a peak of 22.4 per cent in 1997 but thereafter fell to 11.3 per cent in 2011.6 These declining numbers can be attributed to a faster rate of growth in African trade with the rest of the world rather than to a slowdown in intra-African trade per se. From 1996 to 2011, intra-African trade rose at a robust rate of 8.2 per cent on average per year but African trade with the rest of the world grew faster at 12 per cent on average per year.”
However, In developing Africa, the share of intra regional exports amounted to 10.9 per cent of world African exports in the period from 2007 to 2011, while the share of intra regional imports to world African imports was 12.7 per cent. These shares are lower than those in other developing regions, namely developing America and developing Asia.
Also, the level of African merchandise trade (exports and imports) with the world rose from $251 billion in 1996 to $1,151 billion in 2011. In 2011, exports and imports for Africa totalled $582 billion and $569 billion respectively while exports and imports among developing economies totalled $18,211 billion and $7,321 billion respectively.
Similarly in the period from 2007 to 2011, African exports grew annually on average faster than those in the developing and developed worlds (12.2 per cent as against 9.9 per cent and 7.4 per cent respectively). African imports from the world are characterized by the same scenario, growing nominally faster than those in the developing and developed worlds.
When only volume growth rates are considered, African export performance remained strong over the period from 2007 to 2011.4 African exports rose in real terms at an annual rate of 5.2 per cent compared to 4.8 per cent for the world, 2.4 per cent for developed economies and 2.9 per cent for the developing Americas, albeit lower than that of developing Asia (8.8 per cent) and developing economies in general (7.8 per cent). However on the import side, Africa still scored the highest real growth rate of all the above-mentioned categories of countries.
The report suggested that; Promoting entrepreneurship and building supply capacity are vital to enhancing the capacity of African enterprises to produce and export goods to both regional and global markets in addition to the establishment of a credible mechanism for effective relations between the State and business.
It suggested further that there is a to unlock private sector potential, build productive capacity and enhance prospects for boosting intra-African trade, development of regional production networks or value chains is essential to improving competitiveness and quality standards and to broadening the manufacturing base of African economies.
The report advised African Governments to enhance the implementation of existing regional trade agreements, particularly those related to the removal of tariff and non-tariff barriers and to promote intra-African trad, stating, “boosting intra-African trade to create employment, stimulate investment, foster growth and enhance the integration of African countries into the global economy is one of the main objectives of regional integration in Africa.”
The Economic Development in Africa Report 2013 was prepared by a research team consisting of Patrick Osakwe (team leader), Janvier Nkurunziza and Bineswaree Bolaky. The work was completed under the overall supervision of Taffere Tesfachew, Director, Division for Africa, Least Developed Countries and Special Programmes, UNCTAD.