World Bank report faults Africa on cross-border trade

A new World Bank report has revealed that African countries are losing billions of dollars in potential trade earnings every year because of trade barriers with neighbouring countries.

The report, released on Tuesday, has also shown that it is easier for Africa to trade with the rest of the world than with itself.

The report comes hard on the heels of African leaders’ calls for a continental free-trade area by 2017 to boost trade within the continent.

African leaders met at the 18th African Union Summit at AU Headquarters in Addis Ababa, Ethiopia from 23 to 30 January this year where they adopted a new theme ‘Boosting intra-African trade’.

According to the new report, De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services, regional fragmentation could become even more costly for the continent. For example, the report cites how the South African supermarket chain, Shoprite, spends $20 000 (about K3.34 million) a week on import permits to distribute meat, milk and plant-based goods to its stores in Zambia alone.

“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. African leaders must now back aspiration with action and work together to align the policies, institutions and investments needed to unblock these barriers and to create a dynamic regional market on a scale worthy of Africa’s one billion people and its roughly $2 trillion economy,” reads the report quoting Obiageli Ezekwesili, the World Bank’s vice-president for Africa, and a former Nigerian minister of Extractive Industries.

The report also cites the high-level violence, threats, demands for bribes, and sexual harassment, at the hands of the large numbers of customs and other government officials at the border, that women traders on the border with the Democratic Republic of Congo (DRC) meet.

The report suggests that Africa will have to diversify its exports from depending solely on precious metals and other commodities and encourage more people to trade goods and professional services in accounting, law, education, health care, among others. The region’s large number of young people also calls for significant numbers of new jobs, intensive trade and growth.

World Bank’s Africa director for Poverty Reduction and Economic Management Marcelo Giugale is quoted in the report as saying Africa would benefit more when it removes existing barriers.

The report recommends changes in three key areas of cross-border trade by simplifying border procedures, removing a range of non-tariff barriers to trade and reforms in regulations and immigration rules that limit the substantial potential for cross-border trade and investment in services.