With African leaders now calling for a continental free trade area by 2017 to boost trade within the continent, a new World Bank report shows how African countries are losing out on billions of dollars in potential trade earnings every year.
This is said to be the result of high trade barriers with neighboring countries, and that it is easier for Africa to trade with the rest of the world than with itself.
According to the new report De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Servicesregional fragmentation could become even more costly for the continent with new World Bank forecasts suggesting that economic slowdown in the Eurozone could shave Africas growth by up to 1.3 percentage points this year.
As the authors write, while uncertainty surrounds the global economy and stagnation is likely to continue in traditional markets in Europe and North America, enormous opportunities for cross-border trade within Africa in food products, basic manufactures and services remain unexploited.
The reports says this situation deprives the continent of new sources of economic growth, new jobs, and sharply falling poverty, factors which accompanied significant trade integration in East Asia and other regions.
The cross-border production networks that have spurred economic dynamism in other regions, especially East Asia, have yet to materialize in Africa.
“It is clear that Africa is not reaching its potential for regional trade, despite the fact that its benefits are enormousthey create larger markets, help countries diversify their economies, reduce costs, improve productivity and help reduce poverty”, says Obiageli "Oby" Ezekwesili, The World Banks Vice President for Africa, and a former Nigerian Minister of Extractive Industries.
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 Africas one billion people and its roughly $2 trillion economy."
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