ECA advises Africa to boost trade within to achieve industrialisation

Addis Ababa, 30 November 2015 (ECA) – The Economic Commission for Africa says intra-continental trade presents a great opportunity for the continent to improve its industrialisation drive. Africa should start developing and strengthening its regional value chains, the Economic Report on Africa 2015 recommends.

Speaking at the launch of the Economic Report on Africa 2015 (ERA), during a workshop organised by the African Economic Research Consortium, Mr. Adam Elhiraika, Director of the Macroeconomic Policy Division at ECA, said regional integration reforms should be bold as the Continental Free Trade Agreement.

This year’s report further explores the question of how trade can serve as an instrument for accelerating industrialization and structural transformation in Africa.

At 13% and 9% consecutively, Africa has the lowest global shares of intra-regional trade and regional value-added in intra-regional trade compared to Latin America at 26.7% and 16% and Asia at 52.8% and 40%.

“Along with reduction of trade costs across borders through trade facilitation measures, trade reforms have the potential to more than double the share of formal intra-African trade over the next 10 years”.

“When reforms are successful, this means a higher trade volume. Boosting the proportion of industrial products offers bright perspective for Africa’s industrialisation,” said Mr. Elhiraika

The report also notes that intra-African trade in intermediate products such as timber is significantly more diversified than the corresponding Africa’s trade with the rest of the world.

This, ECA argues, should offer opportunities for the creation of regional production networks that could lead to value addition and increased industrialisation.

The report puts emphasis on the importance of services to an economy as they are key inputs to most other businesses, and make a direct contribution to growth and job creation, attract investment and are important for value addition along regional and global value chains.

ECA also recommends that countries make priorities and be selective in the industries they choose to promote. A highly selective and carefully designed trade policy is important to promote efficiency of mature firms and protect infant industries, the report states.

The ERA concludes that trade-induced industrialisation is not automatic but requires concerted efforts at policy and mobilisation levels. For trade to contribute to industrialisation, ECA’s report recommends “integrated and coherent trade and industrial policies along with consultations with and the inclusion of various stakeholders”.

The Economic Report on Africa was launched during the African Economic Research Consortium Biannual Research workshop on ‘Agriculture and Structural Transformation in Africa’, held from 30 November – 02 December 2015 in Addis Ababa.

 

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