Geneva - African governments should take vigorous measures to boost their private sectors, or the increased regional trade will benefit foreign firms more than African ones, said a report released by the United Nations Conference on Trade and Development (Unctad).
The Economic Development in Africa Report 2013 noted the decision by African leaders in January 2012 to eliminate intra-African trade barriers to boost regional trade.
The share of intra-African trade in total African trade fell from 22.4% in 1997 to 11.3% in 2011. Over the 2007-2011 period, the average share of intraregional exports in total exports was 11% in Africa, compared with 50% in Asia and 70% in Europe, according to the report.
It pointed out that short-term opportunities for regional trade in Africa would be in agriculture, but the greater long-term opportunity, and greater challenge, was to improve industrial capacities to provide the goods for which regional trade typically increases demand.
The report, subtitled Intra-African Trade: Unlocking Private Sector Dynamism, argued that reducing regional trade barriers would not have the desired impact if it was not complemented by efforts to expand their economies' productive capacity.
That involves measures such as upgrading infrastructure, improving the skills of domestic workforces, encouraging and enabling entrepreneurship, and increasing the size of existing manufacturing firms so that they can satisfy larger markets, it said.
It recommended that African governments strengthen the private sector by making finance more accessible and less costly, and by enhancing mechanisms for government consultation with the private sector.
It said that the distinctive features of Africa's enterprise structure that inhibited regional trade needed to be addressed in order to unlock the trade potential of the private sector, such as the small size and weak linkages between small and large firms.
The small size made it difficult for the companies to operate at the minimum scale necessary in order to be competitive; while the weak linkages prevented small firms from benefiting from the skills and innovation capabilities of large firms, according to the report.
Other structural problems of Africa's enterprises include a high share of informal firms, low levels of export competitiveness, and a lack of business innovation capability. - SAnews.gov.za-Xinhua
