Africa missing out on billions in trade

Africa is losing out on billions of dollars in potential earnings every year because of high trade barriers on the continent, the World Bank said on Tuesday.

“It is easier for Africa to trade with the rest of the world than with itself,” the World Bank said in releasing a new report that examines the barriers that stifle cross-border trade within Africa.

The report comes on the heels of an African Union summit in Ethiopia at which leaders called for a continental free-trade area by 2017.

The World Bank stressed it was even more urgent that Africa improve trade flows because of the sharp economic slowdown under way in the eurozone, an important trade partner under pressure from the bloc’s debt crisis.

The World Bank estimates the eurozone slump could shave Africa’s growth by up to 1.3 percentage points this year.

“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 manufactures and services remain unexploited,” said the Washington-based lender.

Depriving trade
The report argues that the situation deprives the continent of new sources of economic growth, new jobs and an opportunity to make important strides in reducing poverty.

“Trade and non-trade barriers remain significant and fall most heavily and disproportionately on poor traders, most of whom are women,” Obiageli Ezekwesili, the bank’s vice-president for Africa, said in a statement.

She added that leaders needed to “create a dynamic regional market on a scale worthy of Africa’s one billion people and its roughly $2-trillion economy.”

Trade between African states currently stands at 10% of the region’s total trade. In comparison, 40% of North America’s trade is with regional partners and the rate soars to 63% in western Europe.


Aside from red tape, poor infrastructure, especially roads and railways, is a key obstacle. Transport cost in Africa is more than 60% higher than the average in developed countries owing to the poor infrastructure.

“Policymakers have to move beyond simply signing agreements that reduce tariffs to drive a more holistic process to deeper regional integration,” the World Bank report said, citing an array of barriers that make Africa’s borders “very thick” relative to other parts of the world.

The international border running through Kinshasa-Brazzaville, Africa’s third largest urban area, for example, is a huge bottleneck in trade between the Republic of Congo and the Democratic Republic of Congo (DRC), it said.

Formidably high barriers
Though the two cities are regional trade hubs, trade between them is “pitifully small,” said the report, co-authored by Paul Brenton and Gozde Isik.

The report notes that passenger traffic is about five time smaller than that between East and West Berlin before the fall of the Berlin Wall.

If people traveling between San Francisco and Oakland, California, a similar distance, had to pay the same level of fees, they would pay between $1 200 and $2 400 for a return trip, it said.

The exorbitant prices largely stem from lack of competition in river crossing services granted to the countries’ national operators.

In another example, the report said most traders on the border with the DRC and neighbouring countries in the Great Lakes region are women, who say they “routinely” encounter violence, threats, demands for bribes, and sexual harassment at the hands of customs and other government officials at the border.

Even within the regional bloc the Southern African Development Community, barriers remain formidably high. South African supermarket chain Shoprite spends $20 000 a week on import permits to distribute meat, milk and plant-based products to its stores in Zambia alone, the report said.

Another South African retailer took three years to get permission to export processed beef and pork from South Africa to Zambia. — AFP

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Advertising

Protective equipment for schools in KwaZulu-Natal goes ‘missing’

Without protective equipment, schools in uMlazi, Pinetown and Zululand won’t meet the already delayed deadline for reopening

The statue of Louis XVI should remain forever handless

A statue of the French king in Louisville, Kentucky was damaged during the protests against police killings. It should not be repaired
Advertising

Press Releases

Empowering his people to unleash their potential

'Being registered as an AGA(SA) means you are capable of engineering an idea and turning it into money,' says Raymond Mayekisa

What is an AGA(SA) and AT(SA) and why do they matter?

If your company has these qualified professionals it will help improve efficiencies and accelerate progress by assisting your organisation to perform better

Mining company uses rich seam of technology to gear up for Covid-19

Itec Direct technology provides instant temperature screening of staff returniing to the workplace with no human contact

Covid-19 and Back to School Webinar

If our educators can take care of themselves, they can take care of the children they teach

5G technology is the future

Besides a healthcare problem Covid-19 is also a data issue and 5G technology, with its lightning speed, can help to curb its spread

JTI off to court for tobacco ban: Government not listening to industry or consumers

The tobacco ban places 109 000 jobs and 179 000 wholesalers and retailers at risk — including the livelihood of emerging farmers

Holistic Financial Planning for Professionals Webinar

Our lives are constantly in flux, so it makes sense that your financial planning must be reviewed frequently — preferably on an annual basis

Undeterred by Covid-19 pandemic, China and Africa hold hands, building a community of a shared future for mankind

It is clear that building a community with a shared future for all mankind has become a more pressing task than ever before

The best local and international journalism

handpicked and in your inbox every weekday