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Wednesday, 12 February 2014 18:23

Trade Policies and Regional Integration in Africa

By Eromosele Abiodun

LAGOS, Nigeria, February 12, 2014 (This Day) -- To address the challenges impeding the flow of goods and services within the continent, policy makers must employ strategies that would strengthen Africa's infrastructure development.

 

International trade has increased exponentially in recent years. Though African countries benefited from this increase, their share in world trade has remained low; Africa's export trade amounts to only about 3 per cent of world exports.

 

While this poor trade performance is partly caused by trade protectionist policies of the advanced economies against African products, there are also constraints that inhibit trade within the continent.

 

With the expectation of a generally moderate recovery of the global economy and world trade, it is even more pertinent now than before to foster intra-African trade for improved trade performance.

 

Experts say rapid conclusion and resolution of the outstanding issues in the Economic Partnership Agreements (EPAs) negotiations are crucial to Africa's medium-term prospects in both regional and international trade.

 

Indeed, among the different measures that several advanced countries adopted in 2009 to curb the effect of the financial crisis, trade protectionism has been on the rise. Protectionism increased despite repeated assurances in the context of the G20 meetings in London, as well as in the context of World Trade Organization (WTO) talks.

 

Often stimulus packages were geared to favour domestic sectors, such as through export support, or to favour buying, lending, hiring or investing in local goods and services. Such measures clearly discriminate against developing countries, including those in Africa, on several levels. Unfortunately, African governments lack the resources to curb the domestic impact of the crisis with the same type of measures.

 

Also, African companies face unfavourable treatment precisely in markets where additional spending is being promoted. Hence, with these new measures African products easily face discriminatory treatment in relation to similar domestic products and services in developed countries, despite the general agreements about preferential treatment they may enjoy.

 

FG's Taskforce To check the situation in the West African Sub-Regional, the Federal Government of Nigeria recently set up a taskforce on trade facilitation in Nigeria with a mandate to remove all bottlenecks to trade between Nigeria and its neighbouring countries.

 

The Taskforce member comprises representative from Ministries of Commerce and Industry (now trade and investment), Finance and Transport. Others are: the Nigeria Customs Service, Nigeria Shippers Council, the Nigerian Port Authority (NPA), National Agency for Food, Drug Administration and Control (NAFDAC), the Standards Organisation of Nigeria (SON), Nigeria Quarantine Services (NQS), the Nigerian Police, the Central Bank of Nigeria (CBN) and Nigeria Road Safety Corps.

 

While on a visit to the Managing Director of Nigerian Export Import Bank (NEXIM), Mr. Roberts Ungwaga Orya recently, the chairman of the taskforce, Mr. David Adejuwon, said the body has taken proactive steps to identify what constitutes technical and physical barriers to movement of goods in the sub region.

 

He confirmed that there are about 35 check points during the day and about 50 checkpoints at night from Lagos to Seme border hindering trade between both countries. This, he said, was against protocol that ECOWAS member countries signed to reduce it to 3 checkpoints.

 

According to him, all these have been impacting negatively on the country's image and its competitiveness in the effort to attract Foreign Direct Investment (FDI) into the country.

 

He pointed out that once the taskforce was able to remove those barriers in the border post, it will go a long way to facilitate trade between Nigeria and other African States. He called for support and collaboration from NEXIM Bank to facilitate trade between Nigeria and other West African States.

 

Adejuwon on behalf of the taskforce sought for the support of NEXIM Bank in the provision of surveillance vehicles, trade facilitation workshop, sensitisation and public awareness as well as disseminating and publicising information on the operation of the Committee.

 

Earlier, the Managing director, NEXIM Bank, Orya, had pointed out that Nigeria has the biggest market in Africa and there was need to reduce the multiple checkpoints, which have militated against free movement of goods in the sub-region.

 

He added that Nigeria, being a strategic nation in both economic and political institution owned by ECOWAS, needs to explore the sub region market, saying that NEXIM Bank has started deepening payment system by supporting Nigerian exporters. Despite his promises at the time, nothing much has been done to show seriousness on the part of government.

 

NANTS Charges ECOWAS However, despite Nigeria's efforts, some African countries especially those in West Africa are not taking adequate steps to ensure hindrances in achieving regional integration are removed.

 

Recently, the National Association of Nigerian Traders (NANTS), charged Economic Community of West African States (ECOWAS) leaders to address the poor implementation of the ECOWAS Treaty and Protocols, especially the protocol on free movement by member states as a major hindrance in achieving regional integration objectives.

 

Also, the association, in a message and agenda to the speaker of the ECOWAS parliament, pointed out that there is poor adherence to the provisions of the protocol on Rights of Residence and Establishment.

 

It added that the problem is further complicated by the lack of access to the ECOWAS Court of Justice by community citizens on violations of their socio-economic rights under the Protocols and the ECOWAS Treaty itself.

 

"NANTS has been canvassing for the compliance of member states with these laws, but has also noted that the role of the ECOWAS Parliament in cases like this is unfortunately limited to merely advisory as it lacks law making powers necessary for the review of sub-optimal provisions in a Protocol," the association said.

 

NANTS added that, "It is therefore our expectation that your administration as the Speaker of the Parliament would strengthen the extant weak powers of the ECOWAS Parliament, empower the ECOWAS Commission to be more efficient where necessary, enhance the laws of the Community by possibly infusing strict sanction mechanisms thereunto and effectively capacitate even the National Parliaments and other relevant institutions as fundamental organs in the enforcement of laws and or dispensation of justice and integration in West Africa."

 

It urged the Speaker to swim into action to review the laws establishing the ECOWAS Court of Justice, with a view to broadening its mandate and jurisdiction in line with other regional Courts such as the European Court.

 

NANTS said it expects that the ECOWAS Parliament would be instrumental to driving the achievement of the ECOWAS Vision 2020 objectives, particularly of transforming ECOWAS from 'an ECOWAS of States to an ECOWAS of people.'

 

"In this regard, we envisage that the Community Development Programme (CDP) would be institutionalised as a veritable instrument for realising the objectives of the Vision 2020 which is endorsed by the Authority of Heads of States and Governments of ECOWAS. This is essential given that the CDP seeks to anchor regional policies, programmes and plans shaped by the citizens themselves rather than erstwhile practice of approval of wholly-Consultant-drawn-policies and programmes," NANTS said.

 

"Basically, the CDP seeks to rather institute a 'bottom-up' approach to policy making in the region as opposed to a 'top-bottom' approach. As representative of the community citizens, NANTS believes that the ECOWAS Parliament should play a more visible role in the entire transformation process.

 

"We would therefore cherish an opportunity to not just brief you in details on the CDP process but also explore options for the immediate involvement of the Parliament in the CDP process. Indeed, we wish to emphasise that NANTS believes that the ECOWAS Parliament is indispensable and crucial for the actualisation of the ECOWAS vision 2020," NANTS stressed.

 

Trade Performance in Africa Meanwhile, the Organisation for Economic Cooperation and Development (OECD), in a recent report on trade performance in Africa, noted that one critical reason for Africa's relatively poor trade performance is the weak diversification of African trade both in terms of trade structure and destination.

 

Most African economies, OECD said, depend on very few primary agricultural and mining commodities for their exports and mainly import manufactured goods from advanced countries.

 

"As the traditional markets in advanced countries are expected to grow less than markets in emerging Asian and Middle East countries as well as markets within Africa, enhancing trade relations with these more dynamic markets is key. Several inefficiencies also constrain trade within Africa. These inefficiencies include poor transport infrastructure such as maintenance and connectivity, political instability and lack of security within and among several regions, and intra-African trade barriers.

 

"Despite progress, intra-African trade is still low, representing on average around 10 per cent of total exports. Many factors contribute to the low trade performance, including the economic structure of African countries, which constrains the supply of diversified products; poor institutional policies; weak infrastructure; weak financial and capital markets; and failure to put trade protocols in place, "OECD said.

 

OECD in the report pointed out that Africa's trade performance is extremely low compared with other trading blocs outside the continent.

 

It said: "For example, trade within the Association of South East Asian Nations (ASEAN) accounts for about 60 per cent of their total exports. The same is true for the countries belonging to the North American Free Trade Agreement (NAFTA) area, whose intra-regional trade accounted for 56 per cent of total exports. It is no wonder that the economies of ASEAN and NAFTA are doing remarkably well.

 

"Barriers to external and internal trade in Africa are numerous, despite Africa's determination to dismantle trade restrictions in order to create a common market within the framework of regional and sub-regional agreements. These barriers are mostly the consequences of the above-mentioned factors. In addition, 15 of the countries in Africa are landlocked."

 

These countries, the report stressed, continue to face serious challenges in having direct access to the sea adding that lack of territorial access to the sea, remoteness and isolation from world markets, and high transit costs continue to impose serious constraints on the overall socio-economic progress of landlocked developing countries.

 

The situation, it said, has pushed many landlocked developing countries to higher poverty levels.

 

"Currently, the African Union Commission is focusing on its Minimum Integration Programme (MIP), consistent with previous AU Conferences of African Ministers in Charge of Integration (COMAI). This focus underscores the need for rationalising resources and harmonising the activities and programmes of Regional Economic Communities (RECs). The MIP is in line with a broader undertaking, namely the realisation of the African Economic Community (AEC), as envisaged in the Abuja Treaty and the Constitutive Act of the African Union, "the report said.

 

UNECA, AFDB Efforts It added that, "Furthermore, the African Union Commission, together with the United Nations Economic Commission for Africa (UNECA), the African Development Bank (AfDB) and the RECs, has also made notable progress in establishing three-pan-African financial institutions: the African Central Bank, the African Monetary Fund and the African Investment Bank.

 

"The AfDB is also supporting the institutional setup for improving macroeconomic and financial convergence on the continent. It has also focused on the preparation of a continental Programme on Infrastructure Development in Africa (PIDA), as well as on the development of an EPA template to be used as a guide in the negotiations for EPAs. This last aspect will be particularly conducive to greater coherence between the different EPAs being negotiated and other regional agreements, which are already in place."

 

*This story was originally published by This Day.


 
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