One of the noteworthy criticisms of Africa at present is the continent’s inability to satisfactorily boost intra-African trade. Research Analyst at Frost & Sullivan, James Milne, says boosting the levels of intra-African trade is one of the keys to sustain growth, and that African governments will need to be more proactive.

Driven by improved business and investment climates, Africa has raised its potential investment profile in recent years. However, although the perceived improvement has resulted in an influx of Foreign Direct Investment (FDI), trade between African countries has not shown a corresponding increase.

According to professional consulting firm, Frost & Sullivan, the key to boosting intra-African trade is for African countries to fully realise the benefits of investing on the continent.

Says James Milne, Environmental and Building Technologies Research Analyst at Frost & Sullivan: “Currently, the three largest African trade zones consist of ECOWAS, SADC and COMESA, which generate over $1-billion dollars of regional trade annually. However, what is critical to note is that only 7.6% of trade within the mentioned trade blocs is intra-African. This implies a severe under-investment in the continent, and a large opportunity for countries that are willing to enhance and promote free intra-regional trade”.

Low intra-country trade figures are predominantly caused by poor regional transport infrastructure, which drives up transportation costs. Such issues are in the process of being addressed, with an estimated $310- billion expected to be spent on the upgrading of road and rail corridors across Africa between 2010 and 2030. To ease the burden of transport costs, eight heavy-duty ports have also been identified for development or rehabilitation across sub-Saharan Africa.

“Another critical issue, to which African governments could make a far more enhanced contribution is the easing of transport bottlenecks that occur at borders between countries,” says Milne, adding that to boost intra-African trade, a conscientious effort by all governments would be required in order to reduce the legislative burden that is facing companies that trade across borders.

As growth rates slow in emerging economies such as China and India (which are significant investors in Africa), the enhancement of intra-African trade is likely to be crucial in sustaining the economic growth in Africa.

Source: allAfrica.com