New joint ECA-AfDB-AUC Report on Regional Integration calls for strong action to lower costs of doing Business and facilitate intra-African Trade

UN Economic Commission for Africa website. African countries need to drastically improve the quality and quantity of physical infrastructure in order to lower the costs of doing business and increase competitiveness and the volumes of intraregional trade, according to a key recommendation of the fourth report on Assessing Regional Integration in Africa (ARIA IV), published by the United Nations Economic Commission for Africa (ECA), the African Development Bank (AfDB) and the African Union Commission (AUC).

The report, titled “Enhancing intra-African trade” was launched on Monday 24th May in Abidjan during the annual meetings of the African Development Bank as a side event organized under the umbrella of the Coalition for Dialogue on Africa (CodA), which is a joint ECA/AUC/AfDB initiative.

According to the report, over 80 percent of Africa’s total exports are still destined for Europe, Asia and America while a comparable percentage of the continent’s imports are obtained from the same markets.  ARIA IV concludes that a focus on regional integration is critical to accelerate the transformation of fragmented economies to expand markets and widen economic space.

ARIA IV states that between 2000 and 2007, 50 to 60% of exports from Africa’s Regional Economic Communities (RECs) were destined to Europe and the United States of America, while during the same period, only 9 percent of Africa’s imports were provided by African countries.

The report undertakes a comprehensive empirical analysis of the reasons why intra-African trade has remained low over the past decades. The study is also formulating concrete proposals on how to reverse the situation so that African countries can reap the benefits of improved intra-African Trade.

It highlights Africa’s infinitesimal position in global trade, accounting for 2.9% of world exports and 2% of world imports. The lack of diversification and competitiveness of African economies is the major impediment in point. “Many countries are specialized in a small number of primary commodities, while most of their imports consist of manufactures,” says the report.

Other major obstacles to intraregional trade addressed in ARIA IV include the poor state of trade related infrastructure, the lack of macroeconomic coordination in general as well as the multiplicity and inconvertibility of currencies. A case in point is the length of paved roads on the continent. The percentage of total roads in Africa is about 5 times lower than that of high income OECD countries.

Background
ARIA is a biannual report jointly prepared by ECA, AUC and AfDB. The first Report ARIA I, published in May 2004 provided a comprehensive and holistic assessment of the status of regional integration in Africa. ARIA II, released in May 2006 examined the burning issue of the rationalization of the multiplicity of integration groupings and their attendant overlapping memberships. Published in 2008, ARIAIII tackled the issue of macroeconomic policy convergence.

Facilitating and enhancing the process of economic cooperation and integration in Africa is a core component of ECA’s mandate. To fulfill this mandate, ECA has conducted several studies to identify constraints and other factors affecting the integration process and assist member countries in articulating and implementing progressive policies and strategies.

Access the full report here.

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