The African Continental Free Trade Area secretariat has admonished African countries to focus on the production of consumer goods to discourage the importation of goods into the continent.
According to the Chief Technical Advisor of the Secretariat, Prudence Sebahizi, trade deficit can be resolved when African countries add value to their exported resources.
Speaking at the ABSA-UPSA Law School Quarterly Banking Roundtable discussion, he opined that African countries should have a robust economic structure that will facilitate trade finance.
“Most African countries are exporting unprocessed products, but import finished products which means they get less in what they are exporting in return. The solution is for us to add value to what we are producing,” he said.
The President, African Development Bank (AfDB), Dr. Akinwunmi Adesina, had recently urged Nigerian manufacturers to prioritise value addition to raw materials in order to remove one of the constraints to competitive manufacturing.
He said a major contributor to poverty in Africa (Nigeria inclusive) was its heavy dependence on its natural resources. His words: “Africa’s natural resources are enough to make it one of the wealthiest in the world; but tragically and ironically, her natural resources have not translated into wealth.
“The reason is simple – a dependency on the export of raw materials with little or no value addition. Exporting raw materials only leads to vulnerability, and no nation or region whatsoever, has succeeded by exporting raw materials. We export natural resources and import manufactured products. This approach is a race to the bottom towards poverty, inflation.”
Adesina’s intervention, which focused on Africa’s bottlenecks to industrialisation, also highlighted a few points such as uneven border policies, foreign exchange and perfectionism as necessary to be addressed.
“Industrialisation is the way out for Africa. The continent lacks industrial manufacturing, which is visible through the fact that African countries impose low tariffs when exporting raw materials but face stiff costs when importing value-added products,” he said.
Commenting on intra-trading among African countries, Sebahizi said it’s presently very low, adding there is the need for countries within the sub-region to trade among each other to address the issue confronting exchange rate fluctuations.
“The level of intra African trade is very low, less than 20 per cent. This means we import more than 80 per cent of what we consume. By doing so, we are losing twice as much as a continent. Thus the value of our currencies is depreciating because of the many imports we’re doing”, he added.
The African Continental Free Trade Area aims at accelerating intra-African trade and subsequently boost Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations.
The secretariat with an economic bloc of $3.4 trillion is pushing for a continent-wide free trade to $1.3 billion people regardless of challenges including poor road networks.
