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‘Cross-border trade, value-chain devt key to industrialisation

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The United Nations Economic Commission for Africa (UNECA) has emphasized the need for African countries to renew focus on cross-border trade and improve value-chain activities as a means of driving industrialization.

According to the Commission, the continent needs to focus key on key issues in order to effectively engage in the global market.

In its latest Economic Report on Africa (ERA), “Industrialising through Trade”, UNECA advocated trade as a tool to promote industrial development and structural transformation.

Launching the report, Minister of Trade and Industry, Ghana, Dr. Ekow Spio-Garbrah explained that, “Africa needs to focus on cross-border trade and it must rise up the value chain.” He called on policy makers in the Continent to translate the ERA recommendations into actions.

Minister and Advisor to the Prime Minister of Ethiopia, Dr. Arkebe Oqubay, urged saying, “We need to focus on three issues to engage in the global market.

One, improve and deepen exports. Two, ensure the domestic market is integrated. Three, be cautious on the overshooting of the service sector while manufacturing is yet low.” Deputy Executive Secretary, ECA, Abdalla Hamdok, highlighted the importance of addressing the challenge of being stuck in bottom of the global value chain.

Hamdock revealed, “There is empirical evidence of bi-directional relationship between industrialization and trade. It is important to gear trade policies towards national development objectives and be selective in specific sectors as the endeavour is costly.” He also indicated that trade could reverse the course of industrialization, unless carefully designed.

On his part, Adam Elhiraika, Director, Macroeconomic Policy Division, ECA, said, “Africa’s growth prospects remain positive despite strong headwinds, with increased private consumption and investment being the key drivers of growth in 2015.

“The current account deficit is expected to remain high owing to trade deficits and increased demand for capital goods. Stable inflation underpins Africa’s economic performance as it is expected to decline from 6.9% in 2015 to 6.7% in 2016. Private capital inflows are expected to remain strong in 2015, thanks to improved business climate and profit prospects.”

However, he cautioned, “Innovative strategies to mobilize domestic and external resources are needed for Africa to bridge the domestic resource gap.” Some of the challenges that Africa faces in the mid-term are the slowdown in oil and commodity prices, slow recovery in developed countries, tighter global monetary policies, weather-related shocks, and political instability.

“However, Africa’s underlying fundamentals for long-term growth remain robust. To ensure resilient economic performance through industrialization, Africa must adopt social development strategies that are consistent with the expansion of modern services and industrial sectors,” he concluded.

Explaining that trade can be a tool to promote industrial development and structural transformation, Director, Regional Integration and Trade Division, ECA, Stephen Karingi, said, “A successful trade-induced industrialization should be interactive and coherent with a country’s development strategy.”

He added, “African firms appear to be increasingly connecting to global value chains, but are mainly confined to the lower-end activities with limited domestic value addition. The scope for global value chains to support structural transformation is, hence, largely untapped, particularly for what pertains to regional value chains and intra-African trade.”


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