Intra-African trade and development

By | March 9, 2010

Ngozi Okonjo-Iweala, Managing Director, World Bank

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Ms Ngozi Okonjo-Iweala, Nigeria’s former minister for finance, and currently a managing director of the World Bank:

intra regional trade in Africa remains low and accounts for less than 10% of total trade . Between 1999 and 2006, for example, intra-African trade increased by an average of just 14 per cent per year, while trade with the United States and China expanded by 26 per cent and 61 per cent respectively. Despite the low level of intra-African trade at the regional level, in some African countries intraregional trade is significant. Five countries export more than half of their goods within Africa, while another 14 export more than a quarter.

She goes on to write about how it works in East Asia.

Intra-regional trade in East Asia has increased rapidly and now represents most of the region’s total trade. The most prominent manifestation of the intensification of Asian intra-regional trade is “production fragmentation” enabling producers and countries to specialize in particular products along an integrated supply chain. As a result, products and components travel repeatedly across borders before becoming final goods. In East Asia, Japan made a conscious decision to outsource production of component electronic parts to Thailand and Malaysia as part of its overall industrial strategy.

Her recommendations include political commitment to regional trade in particular and regional integration in general. And:

A policy framework for intra-regional coordination must be developed and countries must be willing to commit to this framework. This means the leader must handle issues of multiplicity of membership for example which weakens member-state’s commitment to coordinate policies to promote intra-regional trade.

(Know the difference between ECOWAS and WAEMU?)

I would add transport infrastructure. Basic stuffs that make it very difficult, practically, to move things around.

Read the full article here.

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