Buyers pay price of limited cross-border trade in Africa

10 February 2012

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12 February 2012 | Angeline Albert

Africa is missing opportunities to trade with itself which could bring buyers in the continent cost savings on metal, plastics and other goods that are expensive to import.

This is the message from The World Bank's report De-fragmenting Africa, published this week, which emphasises the benefits of cross-border trade in Africa.

Lesotho, Mozambique, Botswana, Namibia and Angola are among the African countries that The World Bank said could purchase cheaper products if they traded more goods and services across their borders.

The document recommended African governments remove cross-border trade barriers for goods and services suppliers by simplifying border procedures, increasing the professionalism of border officials to limit corruption, improve the flow of market opportunity information and assist the spread of technologies such as cross-border mobile banking. It also said governments should remove costly import and export licensing procedures to reduce the cost of transactions.

It urged Africans to follow the example of East Asia and create regional manufacturing supply chains. The report said regional production chains for exports to the world market remain virtually non-existent. The report said: “There are emerging opportunities for cross-border trade in basic manufactures such as metal and plastic products that are costly to import from the global market. The potential for regional production chains to drive global exports of manufactures, such as those in East Asia, has yet to be exploited.”

It added that cross-border trade in services offers “better access for consumers and firms to services that are cheaper and provide a wider variety than those currently available”.

Based on information gathered from the largest organisations engaged in cross-border trade in southern Africa, the report said: “‘Factory Southern Africa’ has yet to materialise, despite the fact that South Africa has the logistics, expertise, and the capital to compete globally but these factors need to be combined with cost-effective endowments of labour and natural resources located in the smaller countries. Harnessing regional integration more effectively, for both goods and services, would help all countries lower their cost base thereby enhancing global competitiveness.”

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