In West Africa, a multi-pronged approach to boost regional trade
In Africa, perhaps even more than other continents, regional economic integration offers the potential to raise living standards, create better jobs and encourage value addition and diversification away from primary commodities. Lowering barriers to cross-border trade and investment makes it possible for Africa’s 54 economies, most of them relatively small, to achieve productivity gains that come with increased specialization and scale. In addition, the goods African countries trade with each other tend to be more sophisticated than those they export to the rest of the world: while medium- and high-technology products account for 25% of intra-African trade, they make up only 14% of the continent’s exports to developed countries.
African governments are pursuing trade and investment integration at multiple levels, notably through regional blocs such as the Economic Community of West African States (ECOWAS) and the East African Community, and more recently through a Continental Free Trade Area. Cognizant that market opening on paper does not translate to actual cross-border business activity they have worked to complement diplomatic initiatives with efforts to bolster the hard and soft infrastructure that are essential for trade. This means road and rail connections, but also modernized border procedures and access to trade finance and market intelligence.
Despite rapid growth since the early 1990s, intra-African exports still account for less than 20% of the continent’s total exports while the figures for Asia and Europe are closer to 60% and 70% respectively. Considerable progress remains to be made, both to increase intraregional trade and to ensure that it translates to inclusive growth. In business surveys conducted by ITC, African MSMEs report multiple challenges associated with exporting to neighbouring countries, notably problems obtaining certification that goods are eligible for tariff-free treatment.
ITC is engaged in a comprehensive effort to strengthen the soft infrastructure that supports intraregional trade within the eight-member West African Economic and Monetary Union (known as UEMOA), a subset of the ECOWAS regional community comprised of Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Nigeria, Senegal and Togo. Specifically, ITC is working to ensure that MSMEs are able to take advantage of commercial opportunities within the sub-region and beyond it.
On the policy front, ITC has supported UEMOA-wide implementation of the WTO Trade Facilitation Agreement (TFA), as well the development of a digitized certificate of origin, the document required for merchandise to circulate tariff-free within the bloc.
To improve the business environment within which MSMEs operate, ITC worked to encourage cooperation among trade and investment support institutions across UEMOA. These institutions, such as trade promotion agencies, play an important role in helping smaller businesses connect to foreign markets.
In addition, ITC supported the creation of online platforms on non-tariff measures and market intelligence, since MSMEs are disproportionately affected, compared to their larger competitors, by costs associated with both.
ITC also organized trade fairs and B2B meetings within the region. A key focus of this work was packaging – an important but often overlooked need for traded merchandise.
With ITC support, UEMOA members have worked to implement the TFA in a regionally coordinated manner so customs and border reforms promote more trade within the bloc as well as outside it. In 2017, UEMOA approved the governance structure and mandate for what will be the world’s first regional, as opposed to national, committee to oversee the implementation of the agreement. ITC helped the bloc plan lay the groundwork for introducing a digital certificate of origin in 2017. ITC also contributed to the bloc’s regional trade policy report for 2017, and trained representatives from member states with a view to harmonizing the bloc’s methodology for conducting trade policy review analysis.
At the institutional level, ITC supported the establishment of Africa’s first official regional network of trade promotion organizations. The network, launched in Dakar, Senegal, in May 2017, will foster cooperative initiatives to encourage intraregional trade. ITC facilitated partnerships between the nascent UEMOA network and its Latin American equivalent, REDIBERO.
Through two online platforms, ITC worked to ease MSMEs’ path to markets within the UEMOA bloc and beyond. ITC trained officials from trade and investment support institutions across the region to operate an information portal called ConnectUEMOA (www.connectUEMOA.com), which provides up-to-date market information and news together with a database of regional companies and an online store for businesses from the region. In addition, a trade obstacles alert mechanism allowing businesses to notify government authorities in real time when they encounter problems importing or exporting merchandise, was extended from Côte d’Ivoire to the entire region.
Finally, B2B meetings at a packaging trade fair in Ouagadougou, Burkina Faso, in October 2017 enabled businesses to develop leads and conclude deals to import and export materials such as corrugated cardboard, packing crates and plastic bags. For instance, a business from Benin struck agreements to import and export corrugated cardboard worth over $11,000, with additional sales in the pipeline. One Senegalese firm struck a tentative agreement to supply mesh bags for fruits and vegetables worth approximately $20,000 to a West African counterpart. A Malian firm is in talks to import over $280,000 worth of a wide range of packing materials from elsewhere in the region.
The project will next turn to bolstering value addition and business competitiveness in key sectors such as cotton, mango, cocoa, pineapple, and information technology.
ITC will work to extend the results achieved in UEMOA to the broader ECOWAS region as part of facilitating the implementation of the Continental Free Trade Area in collaboration with the African Union. A continental trade fair is scheduled to take place in Cairo in the last quarter of 2018.