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Home >> Business
UPDATED: 08:16, October 08, 2004
Africa has great potential to increase intra-continental trade
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The three-day state visit to Zimbabwe by Ugandan President Yoweri Museveni underscores the growing need to promote intra-Africa trade through developing functional trade linkages critical in the continent's drive towards economic integration.

Trade among African countries is still far too low and the UN Economic Commission for Africa (ECA) said it accounts for only about 10 percent of their total exports and imports.

Here are still evident with most African countries still preferring to trade with the United States, Britain, Germany, Japan and others in the European Union and Australia in particular.

The greatest challenge facing Africa today is to transform the African Union from a "club" of heads of state and government into an economic bloc that is relevant to the well-being of its people.

High-level talks between Uganda and Zimbabwe on trade and investment are likely to pave way for the tapping of business opportunities between the two countries.

Ugandan businessmen can tap opportunities that exist in Zimbabwe's textile, tobacco, mining and tourism sector while the east African country's textile, coffee and tourism sectors offer immense opportunities to local entrepreneurs.

Uganda boasts of the Apparels Tri-Star Garment Factory, which employs more than 2,500 people and makes clothes for the local andexport markets, offering Africa a new dynamic in the textile sector, which does not only export raw materials, but finished products as well.

Africa has a great potential to increase intra-continental trade and create more economic opportunities.

The greater emphasis needs to be put on the harmonization of customs procedures, reducing tariffs and non-tariff barriers, improving transport and communication links through investment in regional infrastructure.

Local analysts believe that reliance on Western markets would be still too high and Africa would be the loser in this situation in which the rich and powerful countries peg the prices for their own commodities.

The continuing low level trade among African countries is due to poor transport links. Transport costs remain prohibitive because national roads, air and rail networks are unconnected on the continent, forcing many countries to depend on former colonialpowers.

For example, shipping a car from Japan to Abidjan in Cote d'Ivoire costs 1,500 US dollars. It costs more than three times as much, 5,000 US dollars to be precise, to ship the same car from Addis Ababa to Abidjan, a prohibitive sum to car dealers on the continent.

Africa's share of world exports fell from 6.3 percent in 1980 to 2.5 percent in 2000 according to the United Nations Conference on Trade and Development.

Economies in Africa grew by an average 3.6 percent in 2003, a level which is still far below the goals set in 2000 in the Millennium Development Goals.

Growth exceeded 5 percent in 17 African countries against 11 in2002, while seven countries recorded a negative growth last year.

Economists say increased intra-Africa trade, debt reduction andthe reforming of the world trade rules to meet the interests of exporting African countries can help African economies to grow.

They say African countries should strive to export finished goods and press for equal access to world markets.

Africa's share of international trade is still low because of the continent's heavy reliance on unprocessed and semi-processed, low value added, primary commodities like copper, coffee, cocoa, groundnuts, timber, raw cotton, unprocessed tobacco, iron ore, sugar cane, natural rubber, palm oil and other products. This is made worse by heavy reliance on one or two low value added exportsby most African countries.

During the summit of the Common Market for Eastern and SouthernAfrica (COMESA) held in Kampala in June this year, President Museveni, the current chairman of the COMESA, said Africa should move away from the tendency of asking for donor support, but pressfor equal access to world markets.

"For decades, Africa has demanded aid, aid, aid," Museveni onceremarked in 2003. "I don't want aid, I want trade."

And true, this is what Africa needs. Africa must build mutually beneficial trade linkages and realize its own EU-style economic integration through increased intra-continental trade.

Source: Xinhua

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