UN spokesperson calls for greater Intra-African Trade

Abdoulie Janneh, Executive Secretary of the United Nations Economic Commission for Africa (ECA), on Wednesday called for increased urgency in implementing African regional integration “if our continent is to reap the related gains”.

Addressing the African Union’s Executive Council (Council of Ministers) in Addis Ababa, Janneh stressed that intra-regional trade “plays an important role in promoting economic growth and development “, by providing “wider markets, economies of scale, increased competitiveness and reduced transaction costs”.

The main theme for the AU heads of state summit this weekend is “Boosting Intra-African Trade” – but Janneh pointed out that the level of trade among African counties remains “abysmally low”. Only about 11 per cent of the continent’s total trade is conducted within Africa. This contrasts sharply with the European Union – 60 per cent of EU trade is between EU member states.

Janneh argued that increased trade within Africa “will boost consumer demand, stimulate investment and encourage the development of value chains”.

Intra-African trade, he added, “will also help promote food security by facilitating the movement of food from surplus countries to those facing deficits”.

The global economy, Janneh continued, “similarly stands to benefit through the opportunities that will arise as a result of backward linkages and multiplier effects, while developed and emerging economies with large reserve holdings and successful sovereign wealth funds can also reap substantial benefits from investing in regional infrastructure projects in Africa”.

He was encouraged by the proposed tripartite free trade area between SADC (Southern African Development Community), COMESA (Common Market of Eastern and Southern Africa) and the EAC (East African Community). Janneh believed that such arrangements “will help redress the situation through instruments and policies that reduce tariff and non-tariff barriers, improve payment systems, facilitate trade and enable regional infrastructure projects”.

He stressed the need for freedom of movement and was optimistic that the SADC-COMESA-EAC free trade area will mean “that we do not see a recurrence of restrictions on cross-border movements of critical humanitarian assistance between AU member states”.

The tripartite free trade area would also provide “a good starting point” for the proposal from African trade ministers that a continental free trade area should be launched by 2017.

Janneh warned that trade “is seriously hampered, if not rendered impossible, by the absence of a peaceful and secure environment”. UN agencies and the AU were therefore working together “to manage and resolve conflicts, such as those in Darfur and Somalia”.

“We have also worked together to facilitate discussions between North and South Sudan and in efforts to combat the Lords Resistance Army (the Ugandan terrorist group whose activities have spilled into neighbouring states)”, he added.

Giving an overview of the African economy, Janneh noted that economic growth on the continent had slowed to 2.7 per cent in 2011, compared with almost five percent in 2010. However, this was due largely to the turmoil in north Africa, as dictatorial regimes were overthrown.

Growth in sub-Saharan Africa was 4.5 per cent, which was about the same as in 2010. This growth “continued to be propelled by better economic management, increased agricultural production, fairly strong commodity exports and increased domestic demand”, he said.

Prospects for 2012, Janneh continued, “would seem encouraging, but I would urge vigilance as the signs are ominous and we may face serious threats”. For Europe remains Africa’s largest economic partner, and “we should expect that the crisis in the Eurozone will impact on us through trade, remittances, investment, tourism and official development assistance”.

Furthermore, African exports to emerging economies were likely to be hit by a slowdown in growth in countries such as Brazil, India, China and Mexico. “The best outcome for all of us”, Janneh said, “would be a speedy resolution of the Eurozone crisis and resumed and sustained growth in the United States”.

Political developments also affected growth prospects. The uprisings in north Africa were concerned not also with demands for freedom and justice, but were also spurred by “sharply rising inequality and lack of economic opportunity”, he pointed out. “Such socio-economic concerns are present in almost all our countries where high rates of youth unemployment continue to be a major concern”.

Janneh called for “well thought-out strategies that preserve hard-won fiscal space, harness the rents from natural resources and provide opportunities for increasing and diversifying production”.

Key elements of such strategies would be “the building of infrastructure and the development of modern skills that will encourage private sector investment and open up decent job opportunities, particularly for Africa’s youth, which continues to bear the brunt of a decade of jobless growth”

Post published in: Africa News

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