Infrastructure ‘vital’ to African export revival

Mathabo le Roux

MASSIVE investments to address structural constraints in African economies are needed if countries on the continent are to capitalise on global export opportunities, the United Nation s Conference on Trade and Development (Unctad) has found.

Unctad yesterday released the findings of a report on exports, following market reforms. The findings paint a dismal picture of Africa’s performance in exports.

The body now urges a renewed investment focus on infrastructure development, sector-based development policies and public investment to iron out Africa’s supply-side and structural constraints and enable it to take advantage of export opportunities.

The findings are an endorsement of the trade and industry department’s industrial development policy, which has identified lead sectors in the economy for development through government intervention.

The plan was shot down by free-market economists, who said it could compromise firms’ competitiveness and raise consumer prices .

Unctad’s report found that African countries have made few gains in export markets following the bout of trade reforms driven by international financial institutions. This included the World Bank and the International Monetary Fund in the mid-1980s.

Despite aggressive reforms, including dropping tariffs to an average of 13% and eliminating non-tariff measures such as quantitative import restrictions and administrative barriers, the continent’s share of world exports slipped from 6% in 1980 to 3% last year.

Ironically, African countries now face a formidable hurdle from the very anti-export policies they were encouraged to dismantle when exporting to developed countries, as these countries have persisted with non-tariff measures. These included strict sanitary, phytosanitary and environmental standards and onerous rules of origin.

Unctad’s data show African exports grew a modest 11% after trade liberalisation, significantly behind the 50% growth in exports in non-African developing countries following trade liberalisation, while the continent’s trade balance has deteriorated. The positive increase in exports as a share of gross domestic product is almost entirely accounted for by an increase in fuel exports from Africa.

Over the period, Africa has failed to diversify its export base and more than 60% of countries registered denser export concentrations in 2006 than in 1995. This made them more vulnerable to price fluctuations.

The poor export performance is related to a variety of factors, including high production costs, the high cost of credit, transport and other services, which make African countries poor competitors .

Source: www.businessday.co.za

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