Little regard for processing limits industrial growth, development in Nigeria, others’

dustryDespite a relatively high participation in global value chains, continued dependence on heavy exports of raw materials and intermediate goods have continued to limit domestic transformation and growth in developing economies, development experts have said.

According to UNECA at the 5th global review of Aid for Trade, recent growth in trade flows has not translated meaningfully into structural change and industrialization in the continent.

To address the imbalance, the United Nations Economic Commission for Africa (UNECA) contended that Aid for Trade should target in a more pronounced way those high-end services which promise to exert positive spill overs on the rest of the economy; that is the case of business and financial services, logistics and distribution, as well as infrastructure-related services such as transport and energy provision.

Director of ECA’s Regional Integration and Trade Division, Stephen Karingi, while speaking on “The Future of the European Union Aid for Trade strategy”, said Aid for Trade strategies should ideally contribute to redressing this situation; yet, over the 2011-2013 period, industry only accounted for 6 per cent of Aid for Trade disbursements to Africa.

He argued that one way in which Aid for Trade could have greater impact, is to support the emergence of regional value chains, harness the regional market to foster economic diversification and domestic value addition.

In this context, he noted that the establishment of the Continental Free Trade Area and the implementation of the African Union Action Plan for Boosting intra-African Trade warrant the adequate support as key avenues to achieve authentic regional integration in the continent.

Karingi recalled some of the key findings of a joint ECA-WTO report titled “Reducing Trade Costs to support Africa’s Transformation – the Role of Aid for Trade”, which contained a detailed monitoring of Aid for Trade flows to Africa.

According to him, it is encouraging to see the increase in Aid for Trade funds to Africa, as well as the focus on countries with special needs (namely Least Developed Countries, Landlocked countries and Small Island Developing States).

However, he pointed out that one source of concern from Africa’s point of view is that recent growth has not translated meaningfully into structural change and industrialization.

Karingi also pointed out the critical role played by the services sector in terms of employment creation and contribution to value addition along the value chain.

Touching upon the specific theme of this Fifth Global review – trade facilitation – Karingi warned against the risk of limiting the trade facilitation agenda to those specific measures that respond to the interests of large traders and transnational corporations.

He instead argued that Aid for Trade support to Africa should also focus specifically on the needs of small and medium enterprises, as well as informal traders.

“Moreover, it should support efforts to streamline procedure while enhancing the effectiveness of custom controls, with a view to strengthen domestic resource mobilization and curb illicit financial flows through trade mispricing”, he added.

Echoing some of the concerns raised also in the African region, other panelists noted that there is scope for reducing the volatility and unpredictability of Aid for Trade support, and improving the degree of alignment with recipient countries’ development strategies. They also mentioned the need to facilitating access to Aid for Trade funds by harmonizing procedures and strengthening the coordination across donors, as well as enhancing the dissemination of information about funding opportunities.