World Bank urges African countries to increase and diversify their participation in global trade for economic transformation
African countries were urged to expand and diversify their participation in international trade and global value chains to achieve economic transformation.
A book published by the World Bank, argues that African countries must expand and diversify their participation in international trade and global value chains to reduce poverty at scale and transform their economies.
The book titled “Africa in the New Trading Environment: Market Access in Troubled Times” argues that Africa must go beyond commodity trade and link its production and trade to the global economy to take advantage of unlimited demand and innovation along the supply chain.
“This requires comprehensive and dynamic efforts that strengthen Africa’s export market access and diversify its markets into new regions and new products while strengthening regional trade,” he added.
According to the book, unilateral trade preferences have the potential to promote economic transformation through exports. It also calls for evaluating and reorganizing trade with traditional partners.
It notes that many African countries’ utilization rates for existing trade preferences, such as the African Growth and Opportunity Act (AGOA) and Everything But Arms (EBA) are consistently low.
“AGOA evidence shows that natural resources, primarily oil, account for the bulk of African exports. There is a need to integrate unilateral trade preferences with other efforts to deepen trade and investment between Sub-Saharan African (SSA) countries and OECD countries, primarily the US and EU .
This includes incorporating preferences into foreign aid policy instruments to address structural challenges limiting export capacity. Recent initiatives such as Compact with Africa (CwA) with a strong focus on improving the business environment, building infrastructure and promoting effective regulations and institutions appear to be consistent with this overall approach,” indicates the book.
“The global economy is a source of growth that African economies cannot afford to ignore. While African exports of goods and services have seen their fastest growth in the past decade, volumes remain low at just 3% of global trade. Now is the time for policy makers to broaden their thinking beyond traditional approaches and traditional markets if they are to play an active role in international trade in the 21st century,” said Ousmane Diagana, Vice President of the Bank. worldwide for West and Central Africa.
Commenting on the book, Hafez Ghanem, World Bank Vice President for Eastern and Southern Africa, said: “Deepening regional integration to increase supply capacity and build regional value chains is essential. to the economic transformation of the continent. The establishment of the African Continental Free Trade Area (AfCFTA) presents major opportunities to boost intra-African trade, enhance production and export complementarities, create jobs and limit the impact of commodity price volatility. raw materials on the participants.
“African countries need to undertake bold domestic structural reforms to increase the region’s supply capacity. This can be achieved by improving digital and physical connectivity, maintaining smart macroeconomic management with stable and competitive exchange rates and low inflation, and increasing the efficiency of regulatory, legal and judicial institutions,” said Albert Zeufack , the World Bank’s Chief Economist for Africa.
The book recommends among others; improving physical integration – such as cross-border energy and transport infrastructure and connecting infrastructure; strengthening policy cooperation – such as harmonization of customs rules and procedures and sacrificing some level of sovereignty in rule-making and implementation in favor of regional frameworks and facilitating business integration – such as the regional system of electronic payment, the electronic cargo tracking system, one-stop shops and the easing of restrictions on trade in services. The costs of distance and fragmentation can be reduced through intensive investment in these areas.