25 February 2017

Africa: Why Africans Less Trade Among Themselves?

Photo: Africa
Africa map.

The Regional Economic Communities (RECs) have been established in a bid to garner all opportunities on the ground and boost trade and investment across Africa.

Yet, intra-trade among African countries is valued at 12 per cent. This figure, however, remains dwarf as compared with other continents, such as North America and Western Europe which stands at 40 per cent and 60 per cent respectively.

Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA) President Solomon Afework told The Ethiopian Herald that regional trade integration has long been a strategic objective for Africa.

Hence, he indicated that some success has been registered in terms of eliminating tariffs within RECs. Yet, a fragmentation of market and a range of non-tariff as well as regulatory barriers still account in the rise of transaction costs while limiting the free movement of goods, services, people and capital across borders throughout Africa.

Understanding the role of integration in fostering trade and attracting manufacturers, Ethiopia has endeavored to address the shackles through power supply as well as road and railway constructions.

Though the Chamber is the reflection of the business community, it is pushing business operators to join the manufacturing sector that could generate an awesome return to the nation and operators.

The Chamber is working with penitent stakeholders to shape the intra-trade. "The market is lucrative we should work hand in glove."

Pan African Chamber of Commerce and Industry (PACCI) Executive Director Kebour Ghenna, for his part, made clear that all African countries are part of a trading and/or political blocs, but trade still remains meager.

"We basically produce what we don't consume and consume what we don't produce." For him, this is a weakness that often frustrates policy makers; it complicates regional integration and is a primary reason for the low intra-regional trade.

According to Kebour, part of the problem lies in that most countries belong to 14 different trading blocs with at least two or three overlapping members. This situation has contributed to the weakness of the regional institutions, which mainly perform administrative functions. By far, however, lack of infrastructure, is the most critical one.

"There is much that Ethiopia need to do to increase intra-regional trade. Expanding service sector, including telecommunications, transport, educational and financial into the region."

African Reinsurance Corporation Regional Director George Otieno also said: "There are 6 trade blocs in Africa. Trading blocs are designed to spur intra-regional trade and investment. Statistics for 2016 are not yet widely available but in 2014, trade between regions accounted for approximately 16 per cent."

According to George, Africa could lure as many investors by harmonizing trade policies among countries to reduce bureaucracies that traders face.

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