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ECA seeks policies for industrial growth

By Femi Adekoya
07 October 2015   |   11:27 pm
AS trade continues to play a vital role in Africa’s economic growth performance, its potential to induce industrialisation may not be realised if trade policies that could promote value-added activities are not designed and implemented, latest Economic Report on Africa by the Economic Commission for Africa (ECA) has shown.
Director, Nigerian Ports Authority, Senator Olalekan Mustapha (left); Managing Partner, Paul Usoro & Co. Mfon Usoro; former Head of State, General Abdulsalami Abubakar; former Senator Florence Ita-Giwa; Chairman, International Sea Trade and Investment Convention Steering Committee, Chief Adebayo Sarumi; during International SEA Trade and Investment Convention 2015 in Lagos. PHOTO: GABRIEL IKHAHON

Director, Nigerian Ports Authority, Senator Olalekan Mustapha (left); Managing Partner, Paul Usoro & Co. Mfon Usoro; former Head of State, General Abdulsalami Abubakar;<br />former Senator Florence Ita-Giwa; Chairman, International Sea Trade and Investment Convention Steering Committee, Chief Adebayo Sarumi; during International SEA Trade and Investment Convention 2015 in Lagos. PHOTO: GABRIEL IKHAHON

AS trade continues to play a vital role in Africa’s economic growth performance, its potential to induce industrialisation may not be realised if trade policies that could promote value-added activities are not designed and implemented, latest Economic Report on Africa by the Economic Commission for Africa (ECA) has shown.

According to the 2015 ERA report, tagged “industrializing through trade”, a trade policy must recognise and key into developments in the global production system especially internationalisation of production system with a view to promoting value addition through processing and manufacturing.

Despite a sustained growth profile from 3.7 per cent in 2013 to 3.9 per cent in 2014, the report showed that the greatest deficiency of the current growth episode is its inability to promote structural transformation of the economies of the region.

The report explained the relationship between trade and industrialization, noting that both are basically two sides of the same coin as “industrialization facilitates trade, and trade also facilitates industrialization. Industrializing through trade emphasizes the role and place of trade in fostering industrial development and upgrade. Basically it involves analysis of the structure of exports and the role of trade policy in the production, imports and exports”.

Rudimentary agricultural practices and provision of services dominate the structure of African economies. This overt dependence on traditional agriculture and services sectors can only support limited growth.

Industrialization with its capability to generate direct and indirect employment, strong forward and backward linkages with other sectors of the economy including external sector not only promises to transform African economies but also to ensure that growth translates into sustainable development.
“No doubt, Africa’s industrialization should take advantage of its abundant and diverse resources including agricultural and mineral resources. Thus, as advocated in previous editions of the Economic Report on Africa (ERA), the continent should exploit its comparative advantage in commodity-based industrialization and add-value to these resources using its abundant human capital”, the report added.

Already, there are discussions to review different approaches to understand the potential impact of the Continental Free Trade Area (CFTA) on intra-African trade expansion, structural change, poverty reduction, incomes, employment, agriculture livelihoods and food security.

In June 2015, the African Union summit launched negotiations to achieve a free trade area throughout the continent. The first phase of the negotiations will cover both goods and services followed by investment, competition policy, and intellectual property.

The 2015 Economic Report on Africa (ERA) concludes that trade-induced industrialisation is not automatic but requires concerted efforts at policy and mobilisation levels.

For trade to contribute to industrialization, ECA’s report recommends “integrated and coherent trade and industrial policies along with consultations with and the inclusion of various stakeholders. National trade policy architecture and the flurry of activities in bilateral, regional and multilateral trade negotiations across the length and breadth of the continent must consistently give priority to industrialization”.

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