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Last Updated: Sunday, 23 May, 2004, 10:35 GMT 11:35 UK
Africa tackles trade dilemmas
Analysis
by Orla Ryan
in Kampala, Uganda

A Ugandan woman holding her baby in a hospital waiting area
More trade can boost growth, helping to cure poverty

Road repairs, new street lights, heavy security and finally the cars with dark glass windows start to arrive.

Host cities frequently implement cosmetic changes before a conference begins and Kampala is no different.

Finance ministers from around Africa came to Kampala to discuss how the continent can increase its share of world trade.

They were holding two days of talks on Friday and Saturday under the auspices of the UN Economic Commission for Africa (UNECA) to discuss boosting trade. These talks are to be followed by the African Development Bank's annual meetings.

As Ugandan finance minister Gerald Ssendaula put it in his opening speech, the theme is at the heart of Africa's development challenge - if Africa is to develop, it needs to trade more.

Not just subsidies

One topic high on the agenda was how to relaunch the World Trade Organisation's stalled Doha round of global trade talks and to reach an outcome that benefits Africans.

Think of trade with Africa and people usually think of unfair market access and Western subsidies.

Uganda's President Yoweri Museveni
Uganda's President Yoweri Museveni appealed for fairer treatment for African produce

Given that OECD countries pay their farmers some $300bn in agricultural subsidies alone, how can Africa compete?

In Kampala, ministers were also asking, "If Africa got fair market access, would it be able to compete?"

Rosa Whitaker, the former assistant United States trade representative to Africa, said: "As important as market access is, it is not Africa's greatest development challenge."

"More effort needs to be made in building the capacity of the private sector....Market access means nothing if your private sector cannot produce products the world wants to buy."

Rich nations' subsidies hurt Africa's ability to trade, ministers concluded on Saturday, but urgent domestic action is needed too.

Finished product?

Africa's lack of progress in international trade is well known.

The continent's heavy reliance on commodity exports can prove painful when global prices fall and the weather turns bad.

In fact, UNECA says that only two countries, Mauritius and Tunisia, have successfully made the shift to selling manufactured goods.

Their secret was that they "didn't choose excessive control. They tried to open and manage this combination," UNECA trade expert Hamid Ben-Hammouda, said.

The prize for Mauritius and Tunisia was a competitiveness that few possess.

Allied with this need for competitiveness is a need for a more efficient infrastructure.

It is telling that West African ministers had to fly through Europe to get to East Africa.

Infrastructure either does not exist or, if it does, it is in poorly maintained and expensive. In one case study, it was shown to be six times more expensive in Cameroon, Ivory Coast, Mali than in Pakistan.

Asia rising

In the same period that Africa's share of world trade has fallen, China's share of world trade has grown.

The contrast with the growth of China and the south east Asian tigers is stark.

Kampala street
Africa's development is limping behind growth in Asia.

Ugandan Trade Minister Professor Edward Rugumayo is among the many who say that is because Asia put trade at the heart of their development policies and coordinated their policies across ministerial departments.

In Uganda's two previous poverty eradication plans, he says as illustration, there was but a passing reference to trade.

Coordinating across ministerial departments becomes particularly crucial if import taxes fall. With many African countries relying heavily on trade taxes for revenue, these cuts need to be accompanied by more efficient tax gathering at home.

Trade within Africa

Africa has benefited from access treaties, such as the US African Growth and Opportunity Act ( AGOA). Some argue that AGOA's benefits have been limited, but a more pressing concern is whether its key provisions will be renewed beyond September 30.

Lobbyists are still working hard in Washington to ensure that happens, Ms Whitaker said.

If not, Africa could be looking closer to home for trading partners.

So far, intra-African trade has been small.

It averaged only 8.4% of GDP between 1994 and 2000, compared to over 50% of GDP for multilateral trade.

UNECA's Augustine Fosu believes regional trade will be pursued if market access is not improved. "People are not going to trade beyond African borders in these circumstances," he said.

Regional trade could help Africa build its manufacturing sector, increasing competitiveness and making African companies better able to sell their goods elsewhere when and if better access arrives.

Old words

Discussions on trade and Africa are many, as Ugandan President Yoweri Museveni made clear in his speech on Friday evening.

It wasn't strictly speaking a new speech, he said, but an amalgamation of speeches on the same subject he had made in Tokyo, Marrakech and Uganda.

The words may not have been new, but they did highlight the conundrum at the heart of this debate. "If you deal with supply side constraints but don't deal with access, then where will you offload what you produce?...If the market is not interfered with, I think African countries can overcome the supply side constraints," he said.




SEE ALSO:
Africa ponders making trade work
18 May 04  |  Business
Endgame near in farm trade talks
14 May 04  |  Business
Poor countries seek better deal
05 May 04  |  Business
Geldof at No 10 for Africa talks
04 May 04  |  Politics
Africa Commission's uphill task
04 May 04  |  Business


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