Africa’s intra regional trade volume amounts to only 13.8%- UNCTAD
The United Nation’s Conference on Trade and Development UNCTAD has said that the volume of trade between countries within the African continent and its Regional Economic Communities RECs stands at 13.8 per cent.
This is compared to intra-regional trade among Latin America countries which stands at 22 per cent, Asian countries at 52 per cent and European nations at about 70 per cent.
It was further gathered that trade between Africa and the rest of the world has increased by more than 200 per cent since the year 2000 but this not translated into increased intra trade volumes within the continent.
According to the report, one of the major factors behind this low level of trade integration among African countries is the low level of Trade Facilitation implementation.
Also, a recent research by the UNCTAD shows that African countries have the lowest level of implementation of trade facilitation measures as recorded by the World Trade Organisation’s WTO, category ‘A’ notifications under the Trade Facilitation Agreement TFA.
According to the research, this low level implementing of trade facilitation measure in Africa is adjudged responsible for Africa’s low level trade integration which is hindering the economic potential and growth of the continent.
The report also says that though Africa has a population size and output roughly comparable to that of India, yet African countries are separated by 104 international borders between them.
“Facilitating cross border trade is key for any further economic integration. Trade facilitation implementation is also necessary for overseas trade. It is particularly relevant for the participation of African countries in global value chains and trade in manufactured goods”.
“Today, customs processes involve large amounts of documentation that typically are not digitalised. This and lack of coordination between private and government actors adds unnecessary waiting time and delays to traded goods, resulting in added inventory costs and the risks of penalties for importers and exporters”, the report said..
According to the African Development Bank AfDB, a significant decline in Africa’s poverty will require the continent’s Gross Domestic Product GDP, to grow at an overall average of seven per cent.
The AfDB insists that in order to achieve this goal, it is of paramount importance that Africa’s international trade continues and strengthens its current development.
Similarly, according to the Doing Business Index by the World Bank, one per cent increase in trade is associated with more than a 0.5 per cent increase in income per capita in economies with flexible entry regulations.
The World Bank also says that the gains of trade-enabling measures can contribute to broader objectives, such as private sector development, education, foreign direct investments, market integration, economic growth and employment.
To achieve this, all players across the value chain, comprising governments and their agencies, shippers, customers, etc. need to collaborate in order for the society to get the full benefit from the efforts.
Chief Executive Officer of Maersk Group Worldwide, Seren Skou had while speaking at the recently concluded third conference of the Association of African Maritime Administrations AAMA held in Abuja, said there was need for nations, especially Africa to implement the Trade Facilitation Agreement TFA of the WTO.
The CEO, who spoke on the topic: Maritime Trade Facilitation and Economic Development in Africa, said that when fully implemented, the TFA will represent an important step towards minimising supply chain barriers and reinvigorating global trade, contributing to private sector development, investments, market integration, education and employment.
He identified four trade facilitation principles, which include transparency, which advocates that countries should ensure that all information, requirements and processes for crossing borders are clear specific and easily accessible for all involved and simplification of administrative and commercial formalities, procedures and documentations by reducing bureaucracy.
Other principles, according to him include that countries should take advantage of the international standards on data, documents and procedures, as well as use of ICT to exchange information efficiently and Harmonisation of applicable laws and regulations, for instance within a customs union, which is another step towards trade facilitation through regional integration.
He said: “In December 2015, the Maersk Group joined the Global Alliance for Trade Facilitation with the aim of accelerating trade facilitation. The objective of the Global Alliance for Trade is to accelerate trade facilitation reforms by supporting swift and wide implementation of the WTO Trade Facilitation Agreement TFA.