Africa: Developed World Inhibits African Trade - Report

Hoedspruit, Limpopo province: Hawkers at an informal roadside market.
7 June 2010

Cape Town — Developed countries have responded to the global financial crisis by adopting protectionist measures which have damaged Africa's chances of boosting its exports, according to a major new report.

The report, African Economic Outlook 2010, was released recently at the annual meetings of the African Development Bank group and is being
launched in South Africa on Tuesday.

It says packages introduced by rich countries in 2009 to stimulate economic growth have often been geared to favour domestic interests, by supporting their capacity to export goods, or to favour buying, hiring or investing in local goods and services.

"Such measures clearly discriminate against developing countries, including those in Africa, on two levels.

"First, African governments lack the resources to curb the domestic impact of the crisis with the same type of measures.

"Second, African firms face unfavourable treatment precisely in those markets where additional spending is being promoted.

"Hence, with these new measures African products could easily face discriminatory treatment in relation to similar domestic products and
services in developed countries, despite the general agreements about preferential treatment they may enjoy."

The report adds that protectionism is on the rise "despite repeated assurances in the context of the G20 meetings in London and later in
Pittsburgh, as well as in the context of World Trade Organization talks."

It calls for a rapid conclusion to the Doha Round of international trade talks, and to negotiations on regional Economic Partnership Agreements, saying this is "crucial" to Africa's medium-term trade prospects.

It also notes that African countries benefitted from the exponential growth in world trade which preceded the global crisis but that their
exports still amount to only three percent of the world total.

While protectionism by developed countries accounts partly for this, there were also constraints within Africa which inhibited trade, the report says.

"Most African economies depend on very few primary agricultural and mining commodities for their exports and mainly import manufactured
goods from advanced countries. As the traditional markets in advanced countries are expected to grow less than markets in emerging Asian and
Middle East countries as well as markets within Africa, enhancing trade relations with these more dynamic markets is key."

The report also identifies poor transport infrastructure, political instability and lack of security, and intra-African trade barriers as imposing constraints on trade.

It says trade between African countries is still low, representing on average about 10 percent of their total exports.

"Only 29.7 percent of the African road network is paved," according to the report. "The continent's railway network is also very poor ...
Shipping a car from Japan to Abidjan costs U.S.$1,500, while shipping that same vehicle from Addis Ababa to Abidjan would cost $5,000."

African Economic Outlook 2010 is published jointly by the African Development Bank, the Development Centre of the Organisation for
Economic Co-operation anda Development and the United Nations Economic Commission for Africa.

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