MANY A TIME African governments’ representatives and economic experts have convened to deliberate on the continent’s growth potential, intra-Africa trade has been cited as one of the untapped avenues.
At the just-concluded The Global African Investment Summit, it was not any different; delegates highlighted the continent’s low capacity to trade with itself as one of the bottlenecks holding it back from competing with other regions.
Government officials, business representatives and economic experts insisted that low levels of trade among African countries had seen Africa become less attractive to multinationals and led to slow development of small and medium enterprises (SMEs).
The current levels of trade within the continent have been placed at between 10 and 12 per cent by the various indexes compared to about 40 per cent in North America and around 60 per cent in western Europe.
All this at a time when Africa has close to 10 trading blocs that have been set up to facilitate trade.
Lord Dolar Popat, the UK prime minister’s trade envoy to Rwanda and Uganda, said the greatest hindrances to trade across Africa was high cost of transport, energy as well as low skills.
Lord Popat said beyond the often cited challenges of transport and logistics, most regions across Africa were lacking in terms of the level of skills required to trade beyond their borders.
Another common hindrance observed was the access to potential markets within the region often due to few connecting flights among other logistics challenges.
Members of the private sector also pointed to the logistical challenges and poor infrastructure as some of their greatest challenges which drive up the cost of business and reduce profitability of business.
Ashish Jassal, the regional controller of Export Trading Group, a trading firm with a presence in Uganda, Rwanda and Burundi, said the current state of infrastructure in most parts of the continent further increases risks traders are exposed to.
He said most parts of the continent were not well connected with each other and were better linked to countries outside the continent which explains high levels of trade with Europe and low trade within.
Going forward, experts say among the quick interventions is harmonising trade policies applied between countries in one region to reduce bureaucracies traders endure.
Lansana Kouyate, the former prime minister of Guinea and former head of Economic Community for West Africa (ECOWAS), said before moving to roll out expensive interventions such as road and railway construction, nations should harmonise policies to reduce non-tariff barriers.
“This can be easily done by ratifying protocols of regional trade blocs which would make their markets more accessible and ensure more market access for their traders,” Kouyate said.
He said such interventions had helped increase trade levels in blocs such as East African Community and ECOWAS.
Dennis Karera, the head of the East African Business Council, said the private sector should be closely involved with policy decisions in regards to trade and market access as they were key stakeholders.
Citing an example of the success of private sector in the East African Community, Karera said their involvement in the blocs’ decision making processes had made it possible for policy makers and strategists to identify challenges and mull appropriate interventions.
“After we were heard by the summit of EAC, it was possible to engage politicians in the process of outlining solutions and coming up with a way forward to the challenges,” he said.
On the setting up of regional infrastructure across the region which has often been termed as an uphill task due to the high costs involved and low financing sources, experts called for alternative financing models.
Gabriel Negatu, the regional director Eastern African Development Bank, said there was need to consider an alternative financing model beyond public-private partnerships, which is often used.
“With the current ambitions, we need to come up with alternative financing models to fund our infrastructure ambitions across the various regions. These are to complement the current models of public-private partnerships and borrowing that have been used over previous years,” he said.
Negatu also called for prioritisation of economic integration ahead of physical integration, saying it would improve appeal among partners.