Binyam Tamene
16 September 2008
Addis Ababa — Weak supply capacity, defined as a limited ability to produce the quantity and quality of goods required to respond to global demand for those goods, is the main obstacle to improved export performance in Africa, revealed this year edition of UNCTAD Report on Africa.
It explains why the continent has lost market share from 6% of world exports in 1980 to about 3% in 2007, said the report entitled Economic Development in Africa 2008.
Despite a slight increase in exports as a result of two decades of trade liberalization together with successfully removing many barriers that used to limit trade from the continent, the report said the progress, however, has been less than expected and is far below the increases achieved by other developing regions.
The report subtitled "Export Performance following Trade Liberalization: Some Patterns and Policy Perspectives," further indicated African countries failed to make use of the opened access to world markets.
"Gaining greater access to world markets opens up vast opportunities, but many African countries do not yet have sufficient ingredients in place to take advantage," it said calling for the countries for strengthening their supply capacity.
"They need such building blocks as well-trained workforces, reliable electricity supply, research and development skills, flexible investment and barking services, and efficient transportation to supply, at competitive prices, large volumes of products for which there is global demand," it said According to the study, governments on the continent also need to take effective steps to reverse several worrisome trends, including the decades of relative neglect of agriculture that have hindered African countries at a time of climbing commodity prices.
"In addition, diversification of their economies - long recommended as a way of ensuring more robust and stable growth -- has not occurred; and the manufacturing sector, where potentially higher profits and higher living standards can be realized, has been stagnating while other developing regions have greatly expanded their industrial outputs," it said The report said despite most countries in the region were liberalized as of the second half of the 1990s, which was expected to result in increased production in the tradable sector, the average ratio, however, shows much lower increase.
"Their average ratio of exports to Gross Domestic Product (GDP) increased from 23% before liberalization to 26% after," it continued. "This 11% climb is much lower than the 50% increase recorded in non-African developing countries following trade liberalization."
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