Lack of information disables intra-African trade

01 Aug 2017 08:10am
By Paulus Shiku
JOHANNESBURG, 01 AUG (NAMPA) - The unavailability of information to trade and market access is a serious setback to enhancing intra-African trade.
This was said by African Import-Export Bank (Afreximbank) Intra-African Trade Initiative Senior Manager, Gainmore Zanamwe here on Monday when he did a presentation on the importance of intra-African trade at the opening of the Southern African Development Community (SADC) Industrialisation Week in Johannesburg.
He said without such information, African countries will continue importing and not knowing the goods and services offered by other African countries, they will not trade with each other.
A study conducted by the bank and partners last year on southern African regional value chains for leather and leather products indicates that Australia was the main source of such products for southern Africa, while Zambia exports the same products and at lower prices; an opportunity that can be utilised by SADC states and other countries on the continent.
The study also indicates that South Africa imported leather products at high prices from India, instead of obtaining the same products at a lower price from Ethiopia.
Zanamwe said other challenges to intra-regional trade are the poor implementation of regional commitment, settlement issues, limited access to trade finance, weak trade-enabling infrastructure, and the lack of unified continental standardisation and conformity systems.
He said the level of intra-African trade at 15 per cent is lower than the 37 per cent of intra-regional trade in North America, 51 per cent in developing Asia, 59 per cent in Europe, and 19 per cent in Latin America.
“In terms of industrialisation, Africa stands at 52 per cent, North America tops with 92 per cent, Europe has 72 per cent, Asia 63 per cent and Latin America 54 per cent,” he said, adding SADC dominates intra-regional trade on the continent with 61 per cent in 2014 and 54 per cent in 2015.
Zanamwe noted that Africa has gradually increased its international reserves that are currently estimated at US.dollars 520 billion.
This points to improving the macroeconomic environment for investment which is a crucial component for increased intra-regional trade because it enhances the capacity for production across regional value chains.
African multinational corporations such as Dangote Group, Export Trading Group and El Sewedy, he noted, are increasingly investing across borders and contributing to growth in intra-regional investment flows, which averaged at about 24 per cent of total foreign direct investment flows in Africa.
This is becoming an important source of capital formation for some African economies.
Zanamwe advised Africa to emulate China and use the advantage of technology to market and conduct businesses internationally.
“Even if we say there is no strong trade infrastructure to push our goods to other countries, the Chinese are using the same infrastructure to bring their goods to Africa. We should do the same.”