Intra-Africa trade a key ingredient to poverty alleviation
Posted Monday, April 22 2013 at 17:51
Trade can be an important catalyst to poverty eradication. However, this has not been true in the African story, especially trade within the continent. Worldwide, Africa contributes only three per cent to world trade. This is insignificant and telling of the poverty levels in the continent.
Trade among African countries accounts for 10 per cent of the continent’s total trade balance and it’s the least compared to trade between the continent and markets like Europe, America and Asia. Trade among African countries has been low and not highly regarded. There are reasons to this state of affairs.
First, colonialism played a key role in ensuring that Africa was used as a source of raw materials and not an industrial hub. The countries focus too much on primary goods, mostly agricultural and mineral.
Second, the intra-African infrastructure is minimal and in a poor state. Take the example of Kenya. It is cheaper to call the US or the UK than to do so in the East Africa. Further, Kenya has Ethiopia, South Sudan and Somali as neighbours. For all those years, there are no major roads linking Kenya to Sudan or Ethiopia or Somali, limiting trade.
Trading blocs like the Common Market for Eastern and Southern Africa (Comesa), and East Africa Community seek to improve trade among member states. In the past, Kenyan traders have benefited from Comesa as little or no duty was charged for imports or exports within the bloc.
Beyond the efforts by governments to boost trade, there are many opportunities for entrepreneurs to provide a solutions and create a robust business.
First, it is important to shift from primary products to serious value addition. Africa remains low on the value chain yet it has rich resources. We should invest in industries and factories to add value, create employment and produce finished products, not raw materials. Wealth creation comes from value addition.
Further, with infrastructure development, I can’t help but think about a Kenya with a complete Lamu port and a road to Khartoum or Addis Ababa. The opportunities are vast.
Days when international traders used to depend on buyers in Europe are long gone. Europe has its own share of problems. Your buyer might be right next door in Arusha.
Mr Odhiambo is the managing consultant of Elim Consulting.