Africa loses billions of dollars in potential trade earnings

A World Bank report says African countries are losing billions of dollars in potential trade earnings annually because of high trade barriers with neighboring countries.

The report said t was easier for Africa to trade with the rest of the world than with itself.

The report, “De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services”, which was copied the Ghana news Agency said regional fragmentation could become even more costly for the continent with new World Bank forecasts suggesting that economic slowdown in the Euro zone could shove Africa's growth by up to 1.3 percentage points this year.

It said while uncertainty surrounds the global economy and stagnation is likely to continue in traditional markets in Europe and North America, enormous opportunities for cross-border trade within Africa in food products, basic manufacture and services remained unexploited.

The report said, that situation would deprive the continent of new sources of economic growth, new jobs, and sharply falling poverty, factors which accompanied significant trade integration in East Asia and other regions.

“The cross-border production networks that have spurred economic dynamism in other regions, especially East Asia, have yet to materialized in Africa.

“It is clear that Africa is not reaching its potential for regional trade, despite the fact that its benefits are enormous, they create larger markets, help countries diversify their economies, reduce costs, improve productivity and help reduce poverty. Yet trade and non-trade barriers remain significant and fall most heavily and disproportionately on poor traders, most of whom are women."

The report called on African leaders to back their aspirations with action and work together to align the policies, institutions and investments needed to unblock those barriers and to create a dynamic regional market on a scale worthy of Africa’s one billion people and its roughly $2 trillion economy.

It cited how women traders on the border with the Democratic Republic of Congo (DRC) and neighboring countries in the Great Lakes region described how they routinely encountered violence, threats, demands for bribes, and sexual harassment, at the hands of the large numbers of customs and other government officials at the borders.

It therefore called on Africa leaders to improve cross-border trade, especially by small poor traders by simplifying border procedures, limit the number of agencies at the border and increase the professionalism of officials, support traders associations, improve the flow of information on market opportunities, and assist in the spread of new technologies such as cross-border mobile banking that improved access to finance.

They are to remove a range of non-tariff barriers to trade, such as restrictive rules of origin, import and export bans, and onerous and costly import and export licensing procedures and reform regulations and immigration rules that limit the substantial potential for cross-border trade and investment in services to escape the current straightjacket of trade fragmentation.