NEW BUSINESS ETHIOPIA WEEKLY EDITORIAL
Trade is the cornerstone of all civilization. The most direct and therefore, the most effective sort of trade is that which is done between and among immediate neighbors each of whom has certain goods the other(s) require(s). In this respect, how far the nations of Africa and more pertinently, and the countries of east Africa have gone?
In a word, very poorly! And way under the radar of the most minimal global standards of regional trade. Even the briefest reveals the discrepancy between African regional trade as compared with selected regions of the world.
The Asian continent measures up very well with economic interactivity buzzing, trade and investment flowing back and forth, creating the conditions for accelerated regional growth – a recipe for mutual prosperity. The Peoples Republic of China for instance conducts 48 percent of its imports from neighbors Japan and Taiwan. In the export arena, Japan and Taiwan receive 32 percent of all Chinese export volume.
You might think a better model for integration is difficult to find but an overview of North America’s three largest economies – Canada, United States and Mexico shows otherwise. These three nations are so integrated in terms of import export trade that, some would even say they have taken it (regional trade) too far.
The U.S.A. accounts for 60 percent of all Mexican imports. Mexico on its parts sees a whopping 79 percent of its total export volume streaming to the United States. A further 7 percent transits the US bound for Canada, a country which sends 83 percent of all exports to the Americans, the latter accounting for 56 percent of all Canadian imports.
It is fair to state that these three countries have achieved a large measure of inter-dependency and what problems may or may not exist or arise from such integrated trade, the pros far outweigh the cons.
In stark contrast with the Asian and North American examples of model intra-regional trade, the African continent is characterized by economies that seem to prefer conducting unprofitable and heavily lopsided trade with nations on the other side of the world rather than foster regional economic activity.
Figures reveal that while East African (including Horn of Africa) characteristically under-performs, the other sub regions do not register all that much better. Trade among Kenya, Uganda and Tanzania for example consists of Kenya’s 16 percent exports to Uganda and 7 percent to Tanzania.
Non-East Africa – presided over by South Africa (provides Tanzania with more imports than either Kenya or Uganda. Turning to Ethiopia, only 5.8 percent of exports are destined to close neighbor Djibouti while the regions giant gets over 18 percent of its imports from Saudi Arabia. Trade between Ethiopia and Kenya is negligible as Ethio-Sudanese business interaction.
It is also alarming to note that contrary to global trends, existing levels of intra-regional trade are projected to decline as Chinese, Indian, Turkish and South African competition outpaces anemic African trade.
Prospects being so dim, what chance does intra-African trade hold in globalizing world trade?
The answer is – only if and when Africa’s political and economic leadership, shall, at long last develop a collective will. This is a far shot but it remains the only one. Without this will there is no way that intra-regional trade will cease to be a pipedream.
Armed with such commitment though, Africa can take the necessary steps to develop on its own merit and resources, thereby fulfilling a lacking sense of true independence.
We call the African Union to redouble its efforts on the economic front and nudge push and prod the continent towards cooperative trade. Perhaps then, we shall discover that mutual prosperity will have gone along the way to solving poverty induced socio-political woes.
