Intra-African trade: Protect against protectionism
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Intra-African trade is hindered by protectionism, while historical feuds threaten long-term development. The authorities should be doing more to fight these issues.
Intra-African trade has the potential to draw in investment, foster economic growth and increase employment. These are essential in a region where the young account for 40% of the working-age population, but nearly 60% of the total unemployed.
Yet trade between countries in sub-Saharan Africa has been limited. Aged infrastructure and rent-seeking across borders has limited the amount of trade. African trade is dominated by relationships built with Europe, the US and Asia. According to a report published by the UN in 2013, total intra-African trade reached $130.1 billion in 2011, representing only 11% of African global trade.
The East African Community is one of 13 trading blocs in Africa trying to help free up trade. The EAC is made of five countries: Kenya, Uganda, Burundi, Tanzania and Rwanda – three of which are landlocked. Landlocked countries in the EAC as well as on the rest of the continent rely heavily on their neighbours for their ports – Dar Es Salam and Mombasa in the case of the EAC.
The EAC is working on upgrades of the ports, railways and roads in the region while policymakers are working on regional agreements between the countries to make trade easier. As a result, intra-EAC trade has been growing: most recent data by the EAC Secretariat shows that trade within the bloc grew to $5.5 billion in 2012 from $4.5 billion in 2011 – an increase of 22%.
One of the main obstacles to further integration and increased trade in the EAC is the lack of commitment to policy changes at a regional level, driven by political unease and historical rivalries. National governments often give in to local lobbies for political gain at the expense of regional integration.
The movement of certain goods in the region, which in theory is streamlined by agreements between EAC member countries, is highly political. Intra-regional trade in sugar has become one of the most notorious issues in East Africa, where tariffs and taxes on imports into certain countries remain high to protect local sugar farmers. These lead to tit-for-tat measures in other goods. Long-term economic development for the region is hindered.
Many on the ground do not understand the benefits behind EAC regulation and the free movement of goods. More education is urgently needed and national governments would do better to understand the negative effects these policies have on their countries. At the same time, regional authorities should do more to enforce trade and integration and the removal of such barriers.
Hopefully, signs of new investment, economic growth and increased employment will also do something to offset the wrath of disgruntled lobbyists in the region.