Over fifty years after the end of colonial rule in Africa, Intra-regional trade is still low

Ikenna OBI

Africa’s regionalism is still marred by the low volume of trade between countries in the region

In the current year, 2010, many African countries, Nigeria inclusive, will be marking the jubilee anniversary of their Independence and their exit from colonial rule. Just recently, the Economic Community of West African States (ECOWAS) set up to pursue regionalism in all spheres marked 35 years of its own existence. Yet, the pattern of external trade which tied African colonies to their ex metropolitan powers has largely continued. While neo-colonialism got African countries tied to the trading framework created by their erstwhile colonial masters, import-substitution policies of the 1960s and 1970s which many African countries pursued, encouraged self-sufficiency within national borders rather than a focus on regional trade.

While intra African trade increased by an average of almost 14 per cent per year, between 1999 and 2006, trade with the United States and China grew by 26 per cent and 61 per cent respectively, within the same period.

Available trade data  from United Nations Conference on Trade and Development(UNCTAD) shows that oil and primary commodities dominate external trade, while existing intra-African exports are relatively distributed between fuels, non-fuel primary products, and manufactured goods. UNCTAD data also indicates that agricultural exports account for only 19 per cent of total intra-African exports – less trade-intensive than manufactures, but offering the potential for regional trade expansion benefits from production diversification, especially manufactures.

The persistence of weak physical and institutional infrastructure has been identified as the major obstacle towards the sustained growth of intra-African trade and investments.           With Africa rated as having the world’s lowest shares of regional trade and investment, the UNCTAD report argues that the survival of Africa in this period of global economic crisis, and the future sustainable growth of African economies, are all hinged on a successful regional economic integration on the continent.

To successfully facilitate regional trade and investments, and jump-start the regional integration process on the continent, Africa requires the execution of efficient physical infrastructure, such as roads, railways, telecommunications, and airways connecting different parts of the region.

In its 2009 report, UNCTAD noted that an investment of $32 billion towards the improvement of African road networks would likely generate a regional trade flow valued at $250 billion within a period of fifteen years. Further explaining the multiplier effect of efficient regional physical infrastructure on African economies, the report highlighted that regional trade within the West African Economic Monetary Union (WAEMU) would increase threefold, if all the roads linking the WAEMU countries were well paved and maintained.

In addition to the vital role that regional physical infrastructure would play in driving inter-regional trade and integration, UNCTAD noted also the relevance of inter-country banking cooperation, policy harmonization, efficiency in border procedures, and effective national policies that further, rather than hinder, the process of regional integration.

This critique of Africa’s progress on regional integration by UNCTAD comes in the wake of reports that the West African Monetary Zone (WAMZ) involving the WAEMU countries of the Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone, scheduled to  have commenced  last year had been shifted to 2015.The WAEMU countries have attributed this shift to the unsalutary effects of the current global financial crisis on the economies of member countries, and the poor convergence among the participating economies. However, UNCTAD concludes that regional integration efforts in Africa were still facing serious challenges related to the “lack of political will on the part of some governments to enforce the necessary reforms in their respective countries”.

Aside from issues of political will, the persistent policy inconsistency rife in Africa’s corridors of power, made worse by frequent change of ministers and policy makers, have bedevilled policies towards the promotion of regionalism. Furthermore, the growing antagonistic policies enunciated by some African countries towards businesses run by non-nationals, equally discourages regional business and trade flows. The recent stringent registration policies imposed on businesses run by non- nationals in Ghana is a case in point.

Analysts strongly believe that sustainable regionalism in Africa can only be achieved if African countries choose to concede a measure of their sovereignty in order to allow for positive cooperation on many fronts, just as was done in Europe on its painstaking road to European Union, from 1957 up to the 1990s.