Regional economic integration can boost trade in wood products among African countries, according to the findings of a new report produced by the African Natural Resources Centre of the African Development Bank.
The report, Intra-African Trade in Wood Products - Case studies from Benin, Cameroon, Ghana and the Republic of Congo, published on 19 May, explores the role that forest value chains can play in advancing Africa's development objectives.
The continent's significant forest resources are under-utilized, the report notes. Also, despite the high number of timber-exporting countries in Africa, over 90% of exports are primary products with little value addition, rather than furniture, doors and window frames, printing and writing paper, newsprint, household sanitary papers and packaging materials.
There are plenty of reasons to promote wider intra-African trade of wood products. For developing countries, import substitution is important to advance industrial development but also to eliminate balance-of-payments challenges. The forest products sector is amenable to import saving because demand for forest products is highly response to price shifts.
Also, many other industries have so called forward linkages to the wood sector, meaning that they rely on it for inputs. In turn, the forestry industry also sources inputs from other sectors, which means the sector can influence industrial development at the national and regional levels.
The timber industry can also drive job creation, particularly in rural areas where unemployment is often highest.
According to the report, the African Continental Free Trade Area (AfCFTA), which came into force on January 1, 2021 and created a trade area with a combined GDP of $3.4 trillion, can be a game changer for intraregional trade in wood products. The agreement is expected to reduce tariffs among member countries and cover policy areas such as trade facilitation and services, as well as regulatory measures such as sanitary standards and technical barriers to trade. Overall, intra-African trade is much lower than trade within other regions, at 10-13%. By comparison, intra-regional trade accounts for 72% in Europe and 52% in Asia.
The report identifies six factors that will be critical in boosting the intra-African wood trade: continental destination of products; African destination of products; product type, private sector business interest, tree species demand, and government policy and regulation. Further, African countries' disparate endowments and resources can also spur demand and open greater opportunities for trade on the continent.
The report also recommends harmonization of regulations governing cross-border tariffs and promotion of domestic consumption of finished wood products by guaranteeing quotas in public procurement and providing incentives for value addition.
"Countries need to develop concrete strategies for ensuring further wood processing, stimulating local consumption and taking advantage of the AfCFTA to boost trade in wood products," said Julius Tieguhong, a forestry officer at the ANRC.
Click here to read the full report