Bloomberg News

Intra-Africa Trade May Double on Fewer Barriers, World Bank Says

January 29, 2012

Jan. 29 (Bloomberg) -- Africa could double intra-regional trade by easing non-tariff barriers including customs procedures and poor transport infrastructure, helping boost economic growth, the World Bank said.

African leaders meet at the African Union’s headquarters in Addis Ababa, Ethiopia’s capital, today to discuss ways to boost trade within the continent, which accounts for 12 percent of the total. That compares with 35 percent in Latin America, almost 50 percent in Asia and about 70 percent in Europe, Obiageli Ezekwesili, vice president for Africa at the World Bank, said in an interview ahead of the summit.

A doubling in that rate would add 2 percent to Africa’s gross domestic product, while helping offset the impact of slowing economic growth in countries in the Organization for Economic Cooperation and Development, she said. OECD countries are expected to grow 1.4 percent this year and 2.6 percent in 2013, according to the bank.

Increased intra-African trade is “an area of potential growth and as the global economy deteriorates it is important that Africa discovers Africa,” Ezekwesili said. “The push at this summit has got to be a call to action.”

Trade is hampered by “cumbersome” import and export procedures, “difficult” cross-border processes, the lack of transportation networks, regulatory and trade-settlement issues, she said. The constraints can have an impact on companies like Shoprite Holdings Ltd., South Africa’s biggest retailer, which because of import requirements sent trucks to Zambia with as many as 1,600 documents each, according to World Bank research.

Transport Corridor

Constraints on trade may be addressed by projects similar to the North-South Corridor being developed in southeastern Africa, Ezekwesili said. The corridor, linking eight countries from South Africa to Tanzania, envisages upgrading roads, railways, border posts and ports, while harmonizing transit and transport rule, and simplifying administrative requirements, according to the North South Corridor Programme’s website.

The upgrade and maintenance of roads on the corridor, which stretches from Durban in South Africa, the continent’s biggest port, to Dar es Salaam in Tanzania, will cost $6.9 billion, South African President Jacob Zuma said at a conference in Addis Ababa yesterday. “Serious” work also must be done to improve rail infrastructure, he said.

Africa plans to introduce a Continental Free Trade Agreement by 2017, while boosting intra-African trade to 25 percent to 30 percent within the next decade, according to the African Union.

“The idea should be free trade within the continent to boost the free-flow of goods, services and people,” Ezekwesili said. “Because as that happens, productivity is enhanced, competitiveness is improved. It increases growth and reduces poverty.”

--Editor: Shaji Mathew

To contact the reporter on this story: Paul Richardson in Addis Ababa at pmrichardson@bloomberg.net; William Davison in Addis Ababa via Nairobi at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net.


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