SA-Sadc success example for Africa

SAs successful experience in trading and investing on the African continent, especially in the Southern African Development Community (Sadc) region, sets an example for other African countries to exploit similar opportunities, says a United Nations (UN) study.

The Economic Development in Africa Report 2009, produced by a research team led by Norbert Lebale and released last week, calls for the intensification of intra-African trade in the current economic crisis, especially as foreign aid and investment into Africa are declining.

The report argues that countries such as SA benefit from the harmonising of Sadc policies in taxation, investment, share trading and insurance.

Sadc is also achieving macroeconomic convergence and making good progress in other developmental co-operation areas, such as electricity. The top 10 importers of African products are in Sadc, with SA claiming about 10% of the total share, followed by Botswana at 8,23%, Namibia 6,59% and Cte dIvoire at 4,91%.

Furthermore, SAs exports to Africa make up almost a quarter (24,29%) of the total, followed by Nigeria with 12,37% and Cte dIvoires 7,4%.

This is an indication of the opportunities small and large countries can derive from a strongly integrated economy, particularly in the presence of a strong trade engine such as SA this region is probably the most obvious example of a possible development pole in Africa.

Economist Dr Janvier Nkurunziza, of the UN Economic Commission for Africa, who is part of the research team, says despite the long history of regional integration on the continent, intra-African trade remains small in comparison with other developed and underdeveloped regions.

Over the period 2004-06, intra-African exports were a mere 8,7% of the continents total exports while intra-African imports were 9,6% of total imports. When compared to Europe, the ratio was 68% exports to 71% imports.

Nkurunziza says Africa is the only continent on which the proportion of intraregional exports was lower than 10% in the 1960s largely a consequence of the pattern of trade favoured by colonial rulers , which was extractive and outward-oriented.

However, there has been encouraging growth in intra- African trade since 2004, Nkurunziza says. Of the 52 countries polled, at least seven considered their major export partners to be on the continent while 25 others said the same for their second-most important export partners contrary to what the aggregate figures suggest.

He says the figures are skewed because many of the big exporters in Africa, notably the oil-exporting states such as Algeria, Angola, Libya and the Democratic Republic of Congo, trade very little with other African countries.

But the reason for optimism lies in more than three-quarters of intra-African trade taking place in regional trading blocs. This suggests the regional trade agreements are relevant institutions that should be used as stepping stones for deeper intra- African trade development and economic growth.

Five of the top 10 intra-African importers are landlocked countries, and could use their geographical isolation from world markets to develop regional ties that could deepen intra-African trade. The report says that the global financial crisis requires the re-examination of approaches to international development.

Africa has to speed up regional integration to address the long-standing structural weaknesses that have lowered the long-term growth of most countries on the continent.

The report recommends that regions adopt a co-operation strategy centred on infrastructure development to facilitate physical integration. The bulky nature of intra-African trade requires efficient transport systems, which are now lacking.

Nkurunziza says the slow- paced regional economic integration is increasing many countries economic vulnerability and also undermining efforts to reduce poverty.

Business Day (SA)

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