trade flows in Africa becomes significantly important due to the very low levels of intra-African trade. Contrary to popular notion, the heterogeneity of national exports helps intra-African trade as the spread of products across the continent allows for more trade between regions with large food demands. Trade is widely accepted as an important engine of economic growth and development. The TFA, if implemented, will surely benefit Africa by increasing intra-African trade and further opening African economies to foreign investment and trade. 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For instance, resource-rich countries, can obtain supplies from countries with … The January 2011 AU Summit endorsed the recommendation of the 6th Ordinary Session of the AU Ministers of Trade held in Kigali from 29 October – 2 November 2010 to fast track the establishment of a Pan-African Free Trade, besides The January 2012 African Union Summit of Heads of State and Government focused on the theme of “Boosting Intra- Africa Trade”. The pattern in North America, by contrast, is more of a finely graded exchange of components and finished goods. To offer some perspective, intra-EU trade is worth 65% of the region’s total trade; while trade among the ASEAN+3 countries (the ten ASEAN members plus … The AU offers exciting opportunities to get involved in determining continental policies and implementing development programmes that impact the lives of African citizens everywhere. Increased intra-Africa trade is the best way for Africa to use all of its resources and talent to become self-sustainable and prosperous. 1.1.1. H.E. Intra-African trade The promotion of intra-African trade is the first pillar of the Bank’s Fifth Strategic Plan, informed by the view that intra-African trade offers tremendous potential as a mitigant against adverse external shocks and global volatility. On Tuesday he visited Abuja, Nigeria’s capital, for talks with President Goodluck Jonathan. The Ecobank researchers give two examples of informal trade routes that are well established. All rights reserved. The Intra-Africa Academic Mobility Scheme supports higher education cooperation between countries in Africa.The scheme aims to promote sustainable development and ultimately contribute to poverty reduction by increasing the availability of trained and qualified high-level professional manpower in Africa. Since 2008, Africa, along with Asia, is the only region with a rising trend in intraregional trade. SACU was established in 1910, making it the world’s oldest surviving customs union and some 40 years senior to Europe’s trade bloc. But despite this head start, intra-African trade links are pitifully weak. Implementing of the actions in each cluster is expected to significantly contribute to Boosting Intra African Trade. Such networks mean there is more trade going on within Africa than is acknowledged. Yet traders find a way around such barriers. This historic Summit Decision is aimed at deepening Africa’s market integration and using trade to serve more effectively as an instrument for the attainment of rapid and … In 2021, IATF’s theme will focus on the newly-launched African Continental Free Trade Area (AfCFTA) - a single market for goods and services across 55 countries, aimed at boosting trade and investment. Sign up to our free daily newsletter, The Economist today, Published since September 1843 to take part in “a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.”. Although intra-African trade is not a panacea for de- velopment, it is quite important. Greater intra-African trade can also provide a cushion for African economies from global and economic crises. The choice of the theme was both appropriate and timely, given the challenges that were facing the trade, and the e need to come up with strategies to improve the situation. A Brief on the African Union Program on Boosting Intra African Trade 1. It is the strategic framework for delivering on Africa’s goal for inclusive and sustainable development and is a concrete manifestation of the pan-African drive for unity, self-determination, freedom, progress and collective prosperity pursued under Pan-Africanism and African Renaissance. the indicative date of 2017. “Structure and budget of the secretariat has been approved”, said Dr. David Luke, the coordinator of the African Trade Policy Centre based in … Background The researcher, on a recent trip to Tanzania, passed through a village in the rift valley near Lake Manyara. Most countries belong to at least two blocs. Staples such as sorghum and cassava (a plant with a carbohydrate-rich root) do not show up in the figures but are traded informally. There are many regions and countries of the world that have been able to lift their people from poverty to prosperity through trade. Addis Ababa, Ethiopia “In some instances, you find out that because of the intra-African trade challenge, Africans take their business outside Africa.” He lamented … This is evident from the recent global economic and financial crisis which, although not of the making of African countries, has had adverse impact on the continents economic performance. The rest of the paper is organized as follows. South Sudan nearly shoots itself in the foot. JACOB ZUMA turned 71 last week. African countries called upon to go beyond political promises for the implementation of Intra-African trade, which still faces lack of infrastructure and financing… Section II … The less cumbersome the trade process is, the lower the cost of goods and services will be. The same is true in Asia. Many other goods move across borders but elude the customs inspectors who record official trade flows. There are many regions and countries of the world that have been able to lift their people from poverty to prosperity through trade. That means intra-African trade creates more employment in the source country than Africa trading with the rest of the world. Secondly, it will build competitiveness, which you can then unleash onto the rest of the world. Africa has 14 different trading blocs with overlapping members. Promoting Africa’s growth and economic development by championing citizen inclusion and increased cooperation and integration of African states. Not everybody agrees intra-Africa trade is that low. A Brief on the African Union Program on Boosting Intra African Trade She observed that 49 countries have ratified to AFCFTA with 11 countries that have ratified while it requires 22 countries to ratify and enter into force in March 2019. There is a similar dodge in west Africa. Car parts whiz back and forth across the US-Canada border. But despite this head start, intra-African trade links are pitifully weak. Made in Africa – Rules of Origin for Enhanced Intra-African Trade 15 1.2 The vision of the Abuja treaty, regional value chains and the African Continental Free Trade Area The establishment of the African Continental Free Trade Area, one of the flagship projects of Agenda 2063, represents a critical step in the journey of Africa towards the Another key feature of Africa’s trade, which has had some adverse implications for its impact on economic growth and development, is its high external orientation and relatively low level of intra-regional trade. He appointed a pan-African committee of experts to review and submit proposals for a system of governance for the AU that would ensure the organisation was better placed to address the challenges facing the continent with the aim of implementing programmes that have the highest impact on Africa’s growth and development so as to deliver on the vision of Agenda 2063. By comparison 60% of Europe’s trade is with its own continent. The strategic emphasis on intra-African trade adopted by the Bank and the African Union provides the opportunity to foster the process of Africa’s industrialization and eventually set the region on an export diversification path There is the increasing attention to the “Blue Economy” with its potential to promote intra-regional trade 1. 3. Imports are shipped into Benin and Togo and spirited across borders to consumers in neighbouring Ghana and Nigeria. Thus a major lesson to be drawn from the systemic shocks in the global economy is the need for Africa to promote intra-regional trade. 2. Boosting intra-African trade and deepening regional market integration constitute a necessary response to the challenges facing Africa in the multilateral trading system and the global economy. Intra-Africa trade is at 12 per cent compared to 63 % in Europe and elsewhere but this has to change,” she said. Even if allowance is made for Africa’s unrecorded informal cross-border trade, the total level of intra-African trade is not likely to be more than 20%, which is still lower than that of other major regions of the world. Due to the fact that Africa does the bulk of its trade with the outside world and the exports are heavily concentrated on primary commodities, the continent has been particularly vulnerable to external macroeconomic shocks and protectionist trade policies. If only goods moved around Africa with as much urgency as Mr Zuma. The economic size of countries is an important determinant of bilateral trade. An Integrated, Prosperous and Peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena. Somali traders based in the Eastleigh area of Kenya’s capital, Nairobi, (known as “Little Mogadishu”) import rice, sugar and consumer goods into Dubai, tax-free, and then distribute them around east Africa. Copyright © The Economist Newspaper Limited 2020. At around 3%, the share of Africa in global trade is insignificant. Intra-Africa trade- The key to boosting African economies More emphasis needs to be placed on trade partnerships among African countries to drive seamless intra-Africa trade… Intra-African trade stands at around 13% compared to approximately 60%, 40 %, 30% intra-regional trade that has been achieved by Europe, North America and ASEAN respectively. Intra-African trade is currently less than 15%, and we are doing more with Europe than we are doing within ourselves. Some experts argue that a big chunk of the conti- nent’s trade is conducted informally and at times across porous borders. In Africa however, trade has not served as a potent instrument for the achievement of rapid and sustainable economic growth and development due mainly to three interrelated basic features: size, structure, and direction. Poor infrastructure is one reason for Africa’s sclerotic trade. In southern Africa for instance, food, fuel and manufactured goods enter the continent at South Africa’s ports and are re-exported by road to Zimbabwe, Zambia and Congo. To effectively achieve this, the plan is divided into seven clusters namely, Trade Facilitation, Trade Policy, Productive capacities, Trade related Infrastructure, Trade Finance, Trade Information and Factor Market integration. (UNECA, 2010a:19). The secretariat of the intra-African trade body will be established in Accra, Ghana as appointment of the secretary general is underway. The boosting of intra-African trade and the deepening of Africa’s market integration, by fostering competition among African countries, will assist in enhancing their capacity and prepare them to compete more effectively on the global market. The Action Plan for Boosting Intra-Africa Trade specifically aims at deepening Africans market integration and significantly increasing the volume of trade that African countries undertake among themselves. Nigeria is poised to overtake South Africa as the continent's largest economy. To counter its relative decline, South Africa is looking to strengthen trade links with the rest of Africa, which is why the continent-trotting Mr Zuma was in Gaborone, Botswana’s capital, last Friday for a summit of the South African Customs Union (SACU). Removing import duties could potentially boost intra-African trade by over 50% while a reduction in non-tariff barriers will double trade volumes, notes the Economic Commission for Africa (ECA). Trade is widely accepted as an important engine of economic growth and development. There are cases where products and services could have been sourced competitively from other African countries but were procured from outside the continent. In North America the figure is 40%. It also endorsed an Action Plan for Boosting Intra-Africa Trade (BIAT). Point estimates suggest that an increase in the reporter GNP by 1% increases its bilateral trade by around 2%. AFRICA — Intra-African trade has long been a topic of much discussion among Africa’s policy analysts. Its potential economic opportunities are vast by allowing African nations to take advantage of economies of scale, generate income and jobs, and access other benefits associated with market integration. Greater intra-African trade is likely to have a more direct impact on poverty by creating opportunities for the poor who both produce and trade the basic foodstuffs that dominate intra-regional trade. Intra-African trade. South Africa’s president certainly gets around for a man of his age. IATF is the key event boosting trade in Africa. Intra-African trade remains low, but according to a 2017 study by the African Development Bank Group, it expanded from 10 percent in 2000 to about 16 percent in 2014. Intra-African trade: A path to economic diversification and inclusion Vera Songwe Friday, January 11, 2019 The debate on the benefits of trade has dominated this decade, and Africa … Commission for Africa observed in its recent report dealing with intra-African Trade that “African countries in general tend to trade more with countries outside the continent than among themselves." With this in mind, the African Union Commission has mobilized around $18 million to support the CFTA negotiations, including funds for a dedicated CFTA unit with the required expertise. No other event brings together more professionals under one roof. In comparison with other regions, intra-African trade still plays a trifling role in the continent’s overall trade. (a). Firms on either side can specialise and become more efficient. On Monday he was in Algeria. If we remove those barriers, then we have a real opportunity of industrialising Africa. African Union Headquarters The priority and focus for Africans should be on how to advance its interest to foster intra-African trade, reducing poverty, productivity and integration through infrastructure development. 7. Find out more by visiting the links on right. Mr. Paul Kagame, President of the Republic of Rwanda, was appointed to lead the AU institutional reforms process. Copper, cobalt and gold go in the other direction. The bulk of the region’s trade is with Europe and America: only 12% is with other African countries, according to research by Ecobank, a Togo-based bank. By 2050, Africa will still have the most investment opportunities in … Agenda 2063 is the blueprint and master plan for transforming Africa into the global powerhouse of the future. Although trade within the continent remains low and has not changed significantly over time, the 2016-2017 period saw an 8% increase in intra-Africa exports, with intra-Africa exports reaching 16% of Africa… 4. This study contributes to the literature by examining a gravity model for panel data from 1995 to 2014 for 53 African countries. Intra-African trade, defined as the average of intra-African exports and imports, was around 2% during the period 2015–2017, while comparative figures for America, Asia, Europe and Oceania were, respectively, 47%, 61%, 67% and 7%. Africa’s trade looks all the more meagre given that many of its countries are landlocked; so much of what crosses its internal borders is on its way to or from other continents. “Trade facilitation is vital for Africa’s own competitiveness as it will reduce costs for traders,” the African Development Bank states . 5. We look to gain more industrial and value-added jobs in Africa because of intra-African trade. Tel: +251 11 551 77 00 Intra-African trade remained low at 14.4 per cent in 2018, with the continental countries trading more with the Asia, according to a revew by the African Development Bank (AfDB) This 4-page infographic provides a visualisation of intra-Africa trade in 2017. Box 3243, Roosvelt Street W21K19 The lower the cost of … That African countries do not trade much with each other has meant that they have been unable to fully harness the synergies and complementarities of their economies and take full advantage of the economies of scale and other benefits (such as income and employment generation) that greater market integration would have provided. African Heads of States and Governments convened in Addis Ababa, Ethiopia January 29-30 to launch a continent-wide free trade agreement (CFTA). P.O. 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