UNITED NATIONS
ECONOMIC AND SOCIAL COUNCIL
Distr.
LIT^ITED
ST/ECA/WP.1/11 14 January 1982 Original'! ENGLISH
ECONOMIC OMISSION FOR AFRICA
ORGANIZATION OF AFRICAN UNITY Ministerial Follow-up Ccmnittee on
International Trade and Finance for African Development
Second Meeting
Addis Ababa 25-28 January 1982
AFRICAN TRADE AND FINANCE RECENT DEVELOPMENTS AND PRDSPECIS
ST/0CA/WP.1/11
TABLE OF CONTENTS
Paragraphs
INTRODUCTION .,, o o. o. o o o o .. „. 1 4
Pages
1 2 4 7
11
11 16 18
1
- 11
— 6 - 10
- 19 11 - 15 - 18 - 19
I. RECENT TRENDS £ND PROSPECTS RELATING TO
TRADE, 1980-1981 ... 5-36 A. General trends of external, trade ... 11-17 B. Balance of payments ... 18 - 25 Co Capital flow and external public debt 26-36 II. INTRA-AFRICAN TRADE AND FINANCE ... 37-88
A. Intra-African trade 37 - 38
B. Trade and economic co-operation ...,.*... 39 - 60 C. Trade promotion ... „... o. o... „. „ „... 61 - 75 D. Financial and monetary co-operation .. o.. o o o. o.. o „ 76-88
III- INTERNATIONAL TRADE AND FINANCE ... ... S9 - 139 20-33 A. Africa and econanic co-operation among developing
countries . .,..."... 89-99 20-22
B. Trade relations between African countries and the
Socialist countries of Fa.stern Europe: ... 100 - 122 22-31 C. Problems and prospects likely to arise for the
African region fran the implementation of the
Cannon Fund for carmodities 123 - 126 31 - 32
D. North-South dialoaue; International Meeting on Co-operation and Development held at Cancun
(Mexico) ... 127 - 139 32 - 33
E. 1981 Annual meetings of the t-torld Bank and the1
International Ptonetary Fund a... 140 - 159 34 - 37
1. ■ This document review tbr najcr ropr^rcir<l ptxI financial event? which have taken pl in ;\frica and the vrxrld since the first meeting of the ministerial Follow-up Cormttee on International Trade and Fiiyuce for African nevolonr>ent held in March 19
2. The first section analyses recent trends and short-tenr. prospects relating to external trade and the balance of paymeaTits of African countries, including capita.! flows and external
* public dcl>t.
3. The second section deals v^it.h iiv-.r-v African trnnc ard co-operation in economic, . monetary and financial ratters.
4. The third and final section conniderr. international economic relations. Particular ercphasis is placed on the drvcionrent of trade and econcnic co-operation ^dth the Socialist countries of Fastem Europe, ^dch should play a decisive role in the: diversification of
trade outside /drrica.
TO 7FRTCAK TR?DF. 1SP0-19P1
5. Ihe Gconcny of African countries has been seriously affected by the consecruences of thi?
vorld economic situation, which is characterized I <y four disroaicting factors^
(a) Inflation rates in most countries have regained verv high and have even increased- (b) GrovTth of real outrut in induetrializi3d countries has s1pv«dc" down considerably to the point of threatening the grewth of ^-orld trade and leadina tc an international recession;
_(c) Sharp fluctuations of interest rates have hanTored stabilization nolicies hv
affectinq exchange rates-
(d) Current external payrnents of the major oroups of countries have shown considerable surpluses and deficits creating general anxiety with reppoct to the capacity of certain
countries, especially those belonaina to the group of developing countries/to finance the deficit of their current transactions to the extent required,
These factors have had an influence on the African economic situation.
6. External trade in the region has recorded larqc deficits, **iich explains in part the slav growth of the value of exports, and the increased vnlir-e of iirrorts of consumer and capital aoods as well as deterioration of the tome of trado^ v;hic!->. in also the result of an increase in the price of industrial goods en the world market.
7O Inspite of large external loans, balances of n?vnents ha.ve stem narked, increases not only in external indebtedness but also in debt r,ervicinay which continued to absorb a very large part of export earnings. 'The positive global trade balance totalling Su? 2^.5 billion in 1980 v,^s unfortunately accorrpanied !r/ an increased deficit in the non-factor service
account.
c\ Available data on the external rutlic debt shn^ that it h?& continued to increase, with the total amount disbursed risina froF! -^U? 41.2 billion in 1977 to $66 UP billion in
1979 as against slightly less than $60 billion in 1978
9. The increase in tliis debt was offset to sono extent bv relatively large inflow of official transfers and by credits from the International ?tonetary Fund".
Page 2
10. The folio-dug sections will focas on an analysis of the major trends concernina the development of trade and balances of payments- of African countries durina the iseriod"
x9S0-1981.
A- General trends of external trade
11. In 1979, total external trade of African countries (table 1) totalled $UP 121 billion
witn exports constituting $68 billion and imports $53 b;Jlione This level of trade
represented an increase of 27.2 per cent with respect to 1977, which had recorded a total amount of $9j.1 billion. During the same period, the total t*orld trade figure *or 1979 was $3,315 billion, while the 1977 figure was $2,292 billion representina an averacre increase of 34.6 per cent with respect to 1977. African trade thus represented 4.1 oer cent and 3.6 per cent of world trade in 1977 and 1979 respectively. It tears mentionina that instead of increasing, Africa's share of total world trade has been steadily declining/
12. According to UNCTAD forecasts, trade trends seem to indicate that in 198G and 1981, external trade in African countries taken as a vfooie will increase with resnect to 1979 In 1980, the external trade of African countries will total $157-7 billion/representing a growth rate of 30.3 per cent. In 1981, the level will increase to $175.3 billion or a total increase of 44 per cent with respect to 1979.
13. In general, the trade of .African countries continued to focus essentially on
industrialized countries, which were the source of almost 75 per cent of African purchases
ana received 63 per cent of African exports.
Exports
14*io-,r'S/l?n?f:S??red earli.er' exports of African countries as a vtole reached $US 68 billion
in 1979 (table 1). With respect to 197?:, export? increased, by 41.5 per cent. Forecasts
for 1930 ana 1981 place the export level at $91.1 billion and $95 billion respectively.
15. The grci-Tth rate- of exports expressed in volume were relatively low (table 2)
After increasing at an average rate of 9 ner cent during the period 1°6O-1P7O, the volume of exports m 1979 recorded a crwth rate of 5OS per cent, whereas for 19P0 and 1981 even lower negative growth rates of -10,6 and. -1.6 per cent respectively are envisaged.
16. The growth rate of the purchasing power of exports has fluctuated sharply, **dl<*
it was 8.8 per cent during the decade 1960-1970,- 8.5 per cent during 1970-1975 8 7 per cent during 1970-1980, it was -13.5 per cent in 1978,' 21,8 per cent in-1*79 and forecast*
estimate 10.1 per cent and. -2.9 per cent for 1980 and 1981 respectively.
Paae 3
Table 1. Trends of African external trade, 1975-1981 (billions of US dollars)
Year 1975 1976 1977 197B 1979 1980 19C1
Exports (f.o.b.)
36.0 42.0 50.1
^R-0 68.0 91.1 95.0
Irrports (f.o.b.)
36.P . 37.2 45.0 51.3 53.0 66.6 79.3
Total trade (f.o.b.)
72.8 72O2 95.1 99.3 121.0 157.7 174.3
Trade balance (f.o.b/f.o.b.)
-0.8 4.8 5.1 -3.3 15.0 29.5 15.7
Sources; UNd£D, Handbook of International Trade and Development Statistics,
Table 2.
(1)
UNCTm), Vfcrld
Economic indicators 1980 and 1981
Growth rate Volume of
exports
(2) Ml countries
1960-1970 1970-1975 1970-1980 1978 1979 1980 1981
Africa 1960-1970 1970-1975 1970-1980 1978 1979 1980 1981
5.9 1.0 2.5 3.6 4.2
■2.6 1.1
9.0 -4.6 -1.1 -3.1 5.8 -10.6 -1.6 .
Economic CXitloo>:, 1979-1981.
j of developing countries, 1960-
(Percentacre) Volume of
inraorts (3)
4.7
0 A
_* * H-
7.8 5.7 0.2 B.I 7.4
3.8 13D8
£.6 1.7 -10.9 10.3 11.4
Source? UNCTAD, Wsrld Economic Outlook,
I n d
1975-1979.
-1979, and forecasts for
i c Purchasing Unit value power of of
exnorts (4)
5.8 11.7 10,2 -5.0 16.7 12.2 3.5
8.8 8.5 fio7 -13.5 21.8 10.1 -2.9
, 1980-1981
exports
(5)
130 181 203
133 210 226
e s (1970 = i Unit value
; of imports (6)
116 141 154
114 196 140
.
100) Terms of
trade
(7)
112 175 132
117 154 152
Page 4
Imports
17. African' inports totalled $53 billion in 1979. As in the case of exports, most imports,. i.eo 74-.8 per cant cf total imports in terms of value, originated in developed countries. Imports, after having recorded negative growth in 1979 (-10.9 per cent), should ijiprove their performance in 1980 and 1981. Accnrr'ing to UNTO\D forecasts, the growth rat of import volume will be 10=3 per cent and 11.? per cent in 19^0 and 1931 respectively.
Their unit value expressed as an index (1970 - 100) increased from 114 in 1979 to 136 and 149 in 1980 and 1981 respectively,,
Bo Balance of payments Balance of trade
18. After shewing a deficit of $3.3 billion in 1978, the trade balance for African countries as a whole shewed a surplus of $15 billion in 1979.
19. UNCTAD estimates for 1980 and 1981 forecast a surplus trade balance of $24.5 billion for 1980 and $15.7 billion for 1981 (table 3). "
Table 3. Balance of payments of African countries, 1975-1981 (billions of US dollars)
1975 1976 1977 1978 1979 1980 1981
1975-
Exports Export?
(f.o.b.) (f.o.b.) 36.0
42.0 50ol 48.0 68e0 91.1 95.0
Sources;
1919.
36.8 37,2 45.0 51.3 53.0 66.6 79.3
Trade balance
-0.8 4,8 5.1
~ja 3 15.0 24.5 15,7
Non-factor services and net private transfers
-S.I -8.9 -11.3 -10. ^ -11,6
"15.4 -18.0
UNCTT-D, Handbook on International Trade i*nd Development
UNCTAD, Wbrld
Currcnt account balance
Econcmic Outlook, 1979-1981.
current account balance
-Po 9 -4,1 -6,2 -13.7 3,4 0,1
Statistics,
2020. The current balance of payments recorded a deficit of $13»7 billion in 197P. The trend was reversed in 1979 and 1980 with a positive balance of $3.4 and $9.1 billion
respectively. Preliminary estimates establish the current deficit at $2.3 billion in 1981, These poor results were influenced by the balance of trade of non-factor services and private transfers and by investment revenues? vMch have declined considerably since 1°75
(table 3).
Page 5
Causes of deficits in the balance of payments of African countries
21, The factors at the source of growing deficits in the balance of payments of African
countries seem to be basically of three typec
2.2, jFirst, there has been a deterioration in tl>^ terns of trade in Third ^orld countries in general. This deterioration is essentially due to tie considerable increase in prices of manufactured goods and especially of capital ocods. The second reason for the
difficulties African countries have had in redressing their balance of payments lies in the stagnation of the economies of most industrialized countries, which do not favour expansion of the volume nor increasing In the price of exports of raw materials and manufactured goods of African countries. Third, expansion of the debts contracted by these countries to finance their current deficits has led to increasingly high interest payments which are yet another burden on their budgets„
23c In addition to these three major causes, other factors have had an impact on the current payments of African countrieso In recent years weather has been very unfavourable and has obliged a large number of African countries to import enormous amounts of
foodstuffs- These imports absorb a very large nart of export earnings. The effects of the rigorous monetary and fiscal policies adopted by industrialized countries are also significant. The policies in question have had repercussions on the level of development aid and credit terms,, such as increases in interest rates and reductions in the maturity of loans contracted by African countries on conventional terms.
Financing of deficits in the current balance of payments
24. The value of international reserves increased, by $2.1 billion in 1977 and by $7.^
billion in 1379 but had decreased by $2.5 billion in 1978„ Accordina to forecasts, it will increase to more than $3 billion in 1981 as aaainst $5.7 billion in 1980 (table 4).
25. The inflow of net capital and shifts in reserves almost covered current deficits in the balance of payments* Consequently, total financial flows into African developing countries of $15.3 billion in 1377 increased to $16O5 billion in 1979 (table 5)
Table.'.FinancinaofthedeficitofthecurrentaccountGlance(billionsofUKdollars)
Year19751976K77197R19791980 CurrentPublicaccounttransfersbalance(net)
-P.9-■".!
-13o7
9,12.3
SourcesxJJtKTf?. 2,72.32O?2.3 Total
5.3
■vr.
10.3
D,TfeuTdboo1:.of
■P?tTorl< Long-fencapitalcomrisincrMotDirectloansinv-BstnvaitOther
■'.:.30a30ar-5?05"^^7JH■0^5—CoS10,6.0.5"0*P3-8a/-3a-r/5^a/
InternationalTradeandndvelr
iEconomicOutlook,1S7M981 -Short-tenrerrors&capitalonissions
^0.5 -1.-1,-0."0-
■>tr^nLftatictics? ,8,71975-1 Shiftsinreservesb/
-1+2,"7-5,
^73. ,1,1■5.2.7
a/^ataonthecapitaljnovcrifjntGfor1979„1S80anol?plwerecorhined
h/Thenign-■inrilicatos.anincr-r^ase.??
Pacre 7
C= Capital flov; and external public debt
Capital inflow from the Development Assistance Permittee (QflC) countries, OPFC countries and, multilateral organizations
26, As previously indicated, net contributions to .Africa from the States members of
the Development Assistance Canmittee (DPC) and OPFC and multilateral oraanizations (table 5) amounted to $U£ 16.5 billion in 1979, broken down as follows $8,7 billion provided c-
concessional terms and $7.8 provided on non-concessional terms. Contributions were only slightly higher than in previous years. Tt*tal contributions had been S13 billion in 1975 and' $15.3 billion in 1977,
21. Since 1976, the structure of capital inflows has been characterized by a narked^
increase in the amount of credits granted on non-concessional terms. While such credits represented 48 per cent of all credits in 1976, they accounted for 56,3 per cent in 197?.
Table 5. Total financial contributions of me and OPFC countries and multilateral oraanizations to African countries,, 1975-197? (millions of tjs dollars)
Tbtal Credits Credits
financial given on given on
contributions concessional terns non-concessional terns
1975 13 027,1 6 R60.5 6 166.6
1976 11 767,3 6 113.0 5 65-'\3
1977 15 292.2 7 <39.8 7 852.*
1978 19 595.5 8 561,6 11 033.9
1979 16 523=3 S 695.0 7
Source; UNOTD, Handbook of International Trade and Development Statistics} 1975-197^ <,
IMF financial assistfice 1/
;-8. Financial assistance to African countries from the International !"Sonetary Fund has increased reqularly in recent years. Outstanding resources loaned by the Fund in the franework of various aqreements have qrown in tlie last t^D years at an average annual rate of 25 per cent and reached SDR l.P billion at the er>d of 19P0-utilization of Fund resources hy African countries will prohtibly continue to increa.se during 1981 and thereafter.
29, Tables 6 ?<nd 1 show tho rapid arovth of Fund assistance recorded in recent years.
'Hiis increase has occurred in three phases. rVhe. first phase followed tho ^irst increase in oil prices in 1973; the second ^as linked, to loans from tho Trust Fund, \-frdlc. tho third phase was essentially a reflection of tt.r? factors^the economic and financial decline of many
African countries, which is wors^aiina., and the progressive change as a reaction to new circumstances, in Fund policies cencerninq the utilization of its resources and the amount of financial assistance that its membcirs nay receive.
1/ IMt" Bulletin, 11 May 1981, 137-141,
TablG6-EricasComitmcntsofFundresources(Millionsofspecialdrawingrichts)
1970-19731974-1977178
Outrightpurchases5Stand-byarrangementsFirstcredittranches4Uppercredittranches6fine-yeararrangementsSupplementaryfinancingfacilityTiulti-annualagreementsSupplementaryfinancingfacilityIntendedFundfacilitySupplementaryfinancingfacility:Compensatoryfinancingfacility3OilfacilityTrustFunda/SDRallocationsTotal(rJ£>talexcludingSDRallocations)12 ItitalGcnrait"TotalCommit-Totalno.ofmeritsno*ofnentsno.ofmantsno.ofmembers(annualmembers(annualmembers(annualaverage)averacre)average)2.079fini
10.227.3 710A 26.021.7 13.C25.215,0
25.0
17.234.7 192013
27b/
27 16.8110.1116.112.5338.6
338O6 52729
29 151.6296.752G.5
526.5
'H-1FSurvey,4May1981 1979198C
24■3327V
27 Ccranit-ments(annualaverage)
16,
26.354,
200c
100.21C.
264.163-1316. *^.3,8'I.0■4.85
0 no,of2231663237324334b/ Ccmnib-ments(annualaverage)
39.6
16.552,0
31.9630.1
446,6i02a.?
726.0
118.0
16316
2370.21152.5
a/Thefiguresshownarefordisbursements.
h/ Excluding members that only received special drawing rights allocations. Data. IMF Fxchange and Trade Relations Deparbnent and International Financial Statistics.
2206.6r-l
F.,CO
rp
Table 7. Outstanding amounts to ZJrrican countries
Benin Botswana Burundi Cape Verde Central African
Republic Chad
Comoros Cfrngc Djibouti
Equatorial Guinea Ethiopia
Gnbon Gambia Ghana Guinea
Guinea-Bissau Ivory Coast Kenya
Lesotlio Liberia Madagascar f^alawi
Source-: D3F !
E Use of
nd-M
Fund credit
9
12 10,
2,
7, 36, 11, 5, 31.
3.
1.
72.
180,
-
47.
41.
47.
Survey, 4.
-
.50
.83 .20
,50
,55 ,00 ,36 ,8fi .46 ,8S .10 .68 58
15 07 66
of use of Fund a/(Millions of
arch 1981
Trust Fund b/ loans
12.71
-
18.5f
™
12.70 5.39
-
12.70
„
4.50 26O39
.... ■
6.85 48.97 23.45
-
50.82
*6,90 2?. 32 25. *1 1^ - 67
' 1981.
credit and Trust Fund
ST/FC
loans special drawing riahts)
Hali
Mauritania
■^atiritrjs ftorocco Niger I^anda
Sno Tone and Principe Senegal Seychelles Sierra Leone Fonalia Swaziland Toqr1 Tunisia Uganda
vJnited Rotxiblic of CSTTGrcon
United Republic of Tanzania
Upper Volta Zaire
Total
M/ll Page 9
Fnd-?!arch 19K Use of
Fund credit R 2?
66 323
74, 17, 3.
IB.
40, 6a
7PO
160.
297.
1 645.
,83 .7^
OR3
.25 ,59 ,1*
,12
.25 .55
19 69 65
91
Trust Fund
W loans
21 12
0 lin 12, 10,
33,
26, 10,
i^-!
22,
34.
.11 12.
42:
P71.
.50 .70 .12
.71 .70
,22
A A ,69
.71
21
71
7«
63
a/ Countries covered by the 7*frican Department, b/ Fran ordinary resources and suprlaientar^: fi
Data; TtT African Derartmento
facility resources
Page 10
32-^ ^ yGa^ 19S0 ITiarked a turning point in the development of Fund policies. Because
of tte warseruisg of the world econonic situation and especially the-deterioration of several countries terra of trade, which is unlikely to be reversed, the Executive Board of the Fund carrxed out a thorough review of its adjustment policies It was aenernlly admitted that tb ■ Fund ought to play a larger role in the adjustment process and in financing balance ofpayments deficits.
31. In the framework of this review, the Executive Directors were opposed to the establish- ment of a special facility canpcxable to tte oil facility, or an extension of the repurchasing period, .t was pointed out that longer adjustment periods did not require longer payback perioas but rather a sequence of adjustrr>ent programmes that would allcW Fund resources to be used beyond the theoretical repurchasing period. It v&s felt that current directives con cerning conditionally were sufficiently flexible to enr±>le the Fund to olav a greater role in adjustment. It was farther agreed that greater efforts should be made, to stimulate suppIv and to emphasize appropriate management of demand in order to offset structural inadequacies".
32. In the context of policies dealing with the utilization of larger amounts of Fund re sources for longer periods of tine, member countries were encouraged to irrplonent effective
adjustment programmes in line with conditionality applicable to uprer credit tranches *dth
the support of Fund resources.
External indebtedness
33. African countries continue to incur serious deficits in their current balances o^
payments. TJese deficits increase considerably their needs for transfers of sunnlanentarv resources, vfriich, m turn, results in constantly increasing indebtedness.
34. The total outstanding debt (amounts disbursed) of all African countries for which statistics are available rose from $US 41,2 billion in 1977 to $66.8 billion in 1979.
?n' ^ ind€to=fidne?s of African countries is at present characterized by large-scale and
increasing recourse to international financial markets and particularly to ca4rcial bankcredits o
36. In the last decade, amounts spent for debt servicing have grown especially rapidlv
™ ^ ^ riSW frCC1 $2'9 billion ^ 1975 to $4 billion in 1977 and $7.9 billion "in
K?SSE ™^tt * »d 1981
Table 8- Payments for external public debt servicing, 1970-197? (Millions of US dollars)
Year Depreciation Interest
63S'5 261,2 901,1
1311
524;5 2002:
^lli 717.2 2 497.5
1975 1 57■'■• 9 fM5 9 ? S6F P
2 168.6 ! 016:5 la
2 544- 1503.0 4 047.2
}fll 3 332'S 2 122.7 5 455 6
1379 4 646.0 3 215.2 7 (£l '
So"rc;'3S: V'orld Bank, annual Repsrt, 1972 and 1981;
WbrJd Debt Tables, vol. II, October 1980.
Paac 11
II o IM^-iiFRICftK TRT.DE £ND FINANCE A. Intra-African trade
q-7 The share of intra-African trade in the continent's total trade with the vorld not
Sky r^inef^11 but also continued to decline during 1930. The followang table show.
Sat Se Stf value of Africa's total exerts increased by $>S 23. 8 billion between 1979
and 1980, the value of intra-African exports increased by only $US 1.3 billion during the
s^e period. Indeed it «*M appear f*a". the table that the share of ^African export,
increased by 0.3 per cent during this period, but taking onto account the fact that the values given are at current prices, this armrent increase v?s, to a large extent, due to
inflation. It isr therefore, most likely that in quantity terms, the **^J* ^to?~^riCOT
exports in Africa's total exrortr was much lower than the 4.4 per cent recorded m 1979.Table 9, Exports by developing 7*frica, 1970-1980 (millions of US dollars)
Intra-African Exports as
Year lotal vorld exports Intra-African exports percentage of wrcld exports
1970 12,164 P1-' ■■ 6.7
1975 35,170 1,551 5.7
io-7r ""> A~\(\ 1 712 ^-0
1976 '..a,^1U x,/i^
1977 49;030 1,760 ' *-/
1978 45,-960 1,606 3O6
1979 - 66,120 2,900 *•'<
1980 89,600 4,202 *-?
Source: UN, Monthly Bulletin of Statistics, various issues,
38 tfo doubt, this poor perfbnranas in intra-African trade was, aitong other thingc, due to limited production capacity, inadequate transport and conwunicatiens systems, unsatisfactory payments arrangonents and credit facilities, old established trade links with the developed
countries, tariff and non-tariff barriers and inadequate trade information and promotion facilities. 1b alleviate this situation, and in accordance vdth the Lagos Plan of Action, efforts continued to be made towards intra-African trade expansion through the promotion of institutional economic co-operation arrangements at subregional and reaional levels.
B, Trade and economic co-operation
<i) Eastern and southern .African FCA/KHTQC
1. Establishment of a rrfcfcrcntial Trade Area' (FTA) for Eastern and Southern
African States
39 TSie Intergovernmental Negotiating Tocm (INT) set up to conduct negotiations on the establishment of a TO for EST5 ccntinucd its task. At its sixth meeting, held in Gaborone (Botswana) in January 1980, the UST v/as able to conclude discussions on eiaht protocols
including one on co-operation in industrial develotrant, one on cooperation in agricultural develornoit and one on transport and cenrwnications. VTiilst the INT achieved satisfactory progress on the negotiations on most protocols, outstanding issues had yet to N= resolved on a few of them, such as those rewarding the rules of origin, and clearing cud. payments arrangements articles of the Treaty. At subsoquent meetings, substantial nrogress vas achieved to such an extent that the Ihird Extraordinary Conference of Ministers of ^a Finance and. Planning, held in ^ddis Ababa in October 19P1 was able to vmvUlzg the Treaty on tt^ establishnent of the PE\. Accordingly, the Extraordinary Conference of th
Page 12
Ministers decided that a Sumnit meeting of Heads of State and Government of Eastern and Southern Africa, preceded by another ministerial meeting, should be held in Lusaka in
December to sign the Treaty.
40. The Ministerial Preparatory Meeting for the "Summit Conference of Heads of State and Government of Eastern and Southern Africa, arid the Stftmit Conference itself at which the Treaty for the establishment of a Preferential Trade Area for the subregion was signed, were held in Iusaka, (Zambia) on 20 and ?1
December 1981, respectively.
41. Nine member States of the Eastern and Southern African subregion, namely the Comoros, Djibouti, Ethiopia, Kenya, Malawi* Pfeuritius, Somalia, Uganda and.
Zambia signed, the Treaty for the Establishment of the Preferential Trade .Area.
42. Followina the signing of the Treaty, the Summit Conference of roads of State and Government decided that?
(1) The ratification process for the PTA Treaty should be corrpleted within a period of not more than six months, startina from 22
December 1981?
(2) The Chairman of the rurtwit Conference, F.E. Dr. Kenneth David Kaundaf President of the Republic of Zambia, be charged with the task of ensuring that those member States **uch are unable to sion the Treaty on 21 December 1981 do so as soon as possible, and. in any case, not later than within a period of three months fros 22 December 1^91.
The member States concerned and the Govexnment of Zambia should fix mutually convenient dates for such signing ceremonies which vill take place in the presence of the Chairman of the Sumit Conference of anv
person designated by him;
(3) Those member States which do not sign the Treaty on 21 December 1PP1 but sign as indicated in (2) above, should be. deemed to have done so
on 21 December 1981;
(4) The EC?, Secretariat should, perform the functions of an interim secretariat for the PTA, until after the first irxsoting of the Council of Ministers
of the PTA
(5) The first meetina of the Council of Ministers of the PTJ*, to be preceded by the first meeting of the Intergcverrrcntal Commission of Experts*,
should be held as soon as possible after 22 June 1982, on the understandinn that the exact dates for the meetings will be set by the interim secretariat for the PTn, in consultation vdth the Chairman of the PT? Council of
Ministers. These meetings vail be held in Lusaka, Zanbia.
2, Kstghlighmcnt of agricultural cnraTditv exchange for EGAS
Paqe 13
43. It will be: recalls tiiat at its Fifth .atim hold in Pa^at. the TT Conference
qmiBtars A»An tc include states and rolat^ activities concern^ tb^ ^anS^
an agricultural cotrodity «xchome fcr EEK3 in the work nrcorarw of tho Lus^kT^;^
™d Souths ^ricn tbtjoc for 1980-21. Hereafter", the S^'co^ril of ^iS
^Fp of thir, project feve now teen cmp
,,-^ IIX and nf' currently undxa: implementation relate to the ^-temination of ific arrangenaits for the .-^taWLishn^nt artl furxAimlm of su.ch h^^T
^ feasi^ilifc^ study on the establishment of the exchanac is to an mtorcwornmcntal moetinq of c&;nerts duo to bo h-lH -^
^ts of tl.c Group will he suMttoc-. ^ a SS 5 ^S
for consideration and decision. ■
to
of ^
(ii) £roat Lnkes Caiirunity FCr
™ ^^5?™ of ecorcnic oo-ooorrtion dirong cnPOC.
n-rocorded trade has boon undcrtal^r. ;*in rocrmnariatlnns of ong other tilingsr closer -co-^^tien .in customs nat^rn, ,,^-re ,d
^ ? raPOC The r»? noc oatmittcc on custms mattc-r and the
p studv on
' ^ eelI*
^ii) Central Africa
«x. idea of enlarge, ,=conanir co-
astries
TOC countries .■m? non-WF/CPage 14
50. Pursuant to a request of the UDUC Meads of Ptate Conference held in Libreville in
^ 13f' the Council of Ministers called up*, ** to undertake an evaluation of
^T"00 ^ — fltdd °f °CDnanic ^t^tion, since its inception, Accordingly ^^ misslon.v^s runted and visited mESC barber countries as well as
"f^ ^ oo^tries mcludina the "Ui,mo mewber countries and the rm&t. Lake j countries. -The report has been conrletod anr* presents to the UOF^r R^ds of ^ Conference held in recover 1991 in Libreville
(iv) West Africa EC
Harmonization of trade liberalization programes (ram?/gyp and riano River Uhion)
51. It has been increasingly realized over the last for years esrociallv since the creation of ECO^S that tiiere vas a aroat r«ri to ensure nrora- co-=ordination andharrnomzation both as regards the tinina snd dcptb Of the disnanUincr of trade barriers
between the three empetent organizations, i.e. ZOXT-S■ f*<mo River Union and CFIO To tnas one, neetincrs of trade, economic and customs experts from HXWP.S, OVD, Mann PiverUnion and the ^UJLPOC took place during 1980 to make-a technical review of k: customs rules and regulations of the three organizations. th.e retinas identified areas of divcrnonc
convergence m the process.
T^n ^Ci^C^]^UtiVCS^ ^XtS °f tile3C ^gonizatiens also held a meetina in Lctr£
Togo, frm 2^~25 Nrvaiher 19P0 Tfech resulted in egreonent betoeen FCO>KF, and Mano Fiver
union on °.
(a) Customs Documents
(b) Statistical standards, and (c) l^aroiclature
53 to-?ever, disagreement between FCOL-7& and CFW in these arens persisted. wdite-table for trade liberalization and origin condition^ particularly the calestion of indiamous capital ownership requironent constituted other .areas o^ tUrawxsnoit" anew the throe ortT*niziinns, 5^, -To resolve these differences, rao indicated, its flGsiro to ^eek a seven year
aorogation frcm the application of the provision n-f: article 20 of tbo ttotv^ treats on most favoured nations in anticipation that after seven yvare, POCfr^P tariffs vjould'havc- reacned the same level as the regional co-crcration t-x Cvrv) of CT^O On the other hr^rl
'^S S"VCr U?lon"s desire ^s to otxarate its rum internal rules ai-na its T-erta: fib»tpp" "'
with the exclusion of the other nco*3\°- r>anbcrs. " ""
55, On the question of derogation, the third co-ordinating meetina of experts reco^Denci'ed %
(a) that a five year derogation pcricd be orantcd to CE?O and "^no River ttiion fro- the
application of tlu; rrovisions of article 20 of the. nxt^S treaty-in recoanition of the fact that CF^O and 'lino River Union have reached a rore advanced staa,-
with their trade liberalization
Page 15 (b) thac the three organizations should undertake to work towards a
convergence of their trade liberalization systems by the end of the period of derogation by jointly undertaking the following studies during the first two years of the derogation periods
le Establishment of-a uniform tax to replace internal taxes 2. EstablishTTuent of a common external :tariff
3. Identification of a coherent econanic development policy for the subregion, and 4. Consideration of the systems of ccrpensation with a view to improving
56. The ECOWAS Ministerial- ^Seeting subsequently decided to set up an ad hoc Ministerial Carmittee to examine the progress of the harmonization negotiations in order to avoid a dead-lock on the outstanding issues. The Carnittee pet in Lagos, Nigeria 11-12 Auoust
1981 and decided that:;
lo There is a need for a period of adjustment, which will be determined after completion of studies 1, 2 and 3 above;
2. The first t>o studies be carried out within a year as from November 1981, to make it possible to determine the period of adjustment ?
3. That during the period of study the following should be implemented?
(a) simultaneous implementation of the three systems of trade liberalization, that is to say CEPD and. Mano River Union should apply their own internal rules, but for trade with other ECOM&S states, the ECa-W? rules should be applied?
(b) consideration of existing tariff levels vdthin CEAO and M3U and existing lists of agreed products, but for new products ECCWAS rules should apply, and
(c) implementation by all sixteen member States of ECOms Customs and Statistical instruments as frcm 1 January 1982„
4c Finally, using the namonization negotiations as a losson, tlie committee recognized the need for a division of labour among the 100 ss in the subregion and renuested that the item be included in the agenda for the next Ministerial Council Meeting
of ECOWAS.
57. It should te noted, however, that improved working relationship among the secretariats, EOCWAS, CEAO, im and the 5ULF0C have teen acliieved and it is expected that on-going attempts to resolve the issue of derogation will axie eventually to a fruitful end0
(v) North Africa E
58. Tiie ECA, in the framerork of the North African MLJLPOC's programme of work- organized a pluridisciplinary mission (on trade and finance,, agriculture, industry, transport and commu nications) . The mission visited all the North African countries and carried out various surveys on ways and means of promoting trade as well as econanic and financial co-ooeration within the sub-region.
59. Those surveys, along with sectoral recommendations, were submitted to the meeting of officials of the North African MJLPOC held in Tangiers (Morocco) from 30 Udvember to 3
December 1981. .
60. Following this meeting it was proposed to submit a programme of work and priorities aimed at strengthening the intra-subregional and subregional econanic co-operation (at bilateral and multilateral levels) to the next meeting of Plenipotentiaries scheduled for inarch 1982 in Tangiers, Morocco, for a final approval„
Page K
Co Trade promotion
W Symposium of Presidents and Secretaries-General of African Chambers of Commerce bl. The Q,Tfffx>sium was organized jointly with EGA and AATPO, in Addis Ababa, Ethiopia
from 16-20 June 1981. .
G2. During that symposium, the delegates were briefed on the Lagos Plan of Action *nd the new African strategy in trade and the possibilities in intra-African trade. Rnphasis was put on rhe necessity for then to take into account that strategy in their daily
activities cud to develop the promotion activities of the chambers of commerce for that
purpose.
63O t ^he meeting was a forum where a lot of experiences were exchanged and a clear consensus attained on the necessity to set up the regional federation of chambers of commerce as a fcllow-up irachir?ery for an effective co-ordination of the activities of chambers of crfrmerce.
£,;. £hc participants agreed to undertake the following:
(a) exchange and dissemnate trade information?
(b) co-operate with AATPO, EGA and OA.U in their activities?
Cc) ro-operate among themselves in the field of trade rrmntion including training
Of ^ '~J5££"
(d) t~tfnr.ee efforts aimed at establishing co-operation aoreexnents between channels.
to. FinaJly, it was decided that TCA and ?I\TPO should convene a meeting of African
Chambers of Carmerce in 1932 in Zimbab^Te to work out the modalities and mechanisms for the establishment of a Federation of African Chambers of Commerce.
■^ frorkshep to bring together buyers and sellers of meat and meat products
fo. She workshop to bring together buyers and sellers of neat and meat products took place,
in rddxs Ababa from 7 to 11 December 1981,
67. It was atterded by delegates from. 17 African countries and observers from UT3CTAB, I1T
CEEV and HCA
Hie objectives of the workshop were basically three, namely;
1. to make it possible for African exporters and importers to get acquainted with each other and enable them to initiate business contacts:
2. to pi-cyide a forum for the identification and discussion of buying and selling possibilities and examining in a frank manner the problems and constraints that exist on both sides in so far as expansion of intra-African trade in meat and
meat products is concerned?
3O to discuss the specific measures that should be taken to overcome these problems and constraints including the creation of an Association of African *feat importers
and exporters.
Paqe 17
69. The workshop aarced on the following recormendations^
-- The setting up of * regional to-c inforrratim syotor. and the strenathenina of
national trace promtxon contros,;
•■• Studies tc tinrk out a compensation fund vfoicb should have a positive inpact on
tae competitiveness of African nv^t-: '
Euy ;\frican meat canmiens thmucrh hig:5g media;
.Actions to be undertaken against the riunpinq practices of extr^-African countries
such as the I^C mad** States? unties
Preferential measures to be- taken by African irrerters in favour of African
Liberalization of intra-African trado on meat and. Treat prcchicts.
70 ate delegates acireed on the idea of scttina up an 'frican Associati
Prospects in the field of trade information
m, it ains at oStablis!^ a rJional
1- The full use of the PADIS facilities;;
3. A rapid gathering and retrieval system,
f
72. At a first stage it involves the ^^^tion of
^o^tion in the fc^rk of the intarmS™,!
E^rts assigned to that centre will provide^ advi
subregxonal and nation,,! level. ,nd ,-iil help a
if
Page 18
75. It is expected that the progressive setting of the- continental network will have positive iirpact on the develouvent of trade arrvong EGVs nerher Statr^ since Se lack
S^r-c^SSo? " ***** ^ °n° °f th° "*" *rt^Iaa" if ^ '«^ obsScl
a
obsSclo'of
D. Financial and monetary oo-operation
ia) ^tablishrasnt of a clearing and payments arrangements
76. Within th;= framewtck of the i.acotiations that have Jjeen going on for the last three
years on the e.tablitot of a PTA for Eastern and Southern AfSa^ ST ^
most e:ctennavely discussed Protocol has teen that on clearing and P)
?Z- ^^f^31 sessions devoted to this issue, the Intergovernmental Negotiatim Team
(Mr) decked, to refer the *ole draft Protocol for the .a.sLatimW^w te eleventh sessao,, of the East African subregional camittce of the AssoSSS ofkf
^5CanCerCral E^ <JU1Y 19S0) ' ^ Secora3 BctraordiiBTY Conferenofof"^SisLr^ of (January 1981) and thai to the Itesuned Session rfS^
^nability ?f ^^ ^et^s to resolve sore of the outsS
U£ a.v?ttan? ^rouP conposed of governors of Central BanksS^ ^ht-^^tries to review in detail the whole draft Protocol
repDrt of the TOrkir^ ^P ™s atfanittec!
of Trade, Finance and Planning. After
itt ^ «****« «* ~ —try, decided
^c^ bank for Eastern and Southern
i
t:o - January 1981. the- secretariat ^« requested'to.^; C°Uncil °f ^"ters at its r^
^nt of a subrcgional de-.elop.ent bank foftheiasterr.
,
. riXj.stcnce of: the Kast African Devclotment Eank. The study wa-51° ^ P^, ^ ^"Cel °f tte raVs i^stituticnal fraro^rk and
^ ^^^ tO.t!!e ^ =^ «* Second F^traordinary c'o^fere^ce
stud^T ^"-nmng. The latUr rccaan.^cd that thl scope of the teri of^f'erer.c^'i^acreer^T^^^^' ^ ^^ f^^=i«J aspect, and We detailed
r ^f;: ji by ^' ■/JB ^ ?lCts was tabled for discussion at the
-y of, llf13te£ of '2rade.- Finance and naming. The meeting decided to refer '""e dri^uarter » ^ Intergovemr,Gntal Team, of Experts frcn the Ministries
as
^ g-'^g-1 African Clearing House
Clearing House was signed in January
ST/ECA/WP.1/11 Page 19
81. Furtherrnore, information and sensitization missions were sent to Central Africa a view, inter alia, to strengthening! rronetary and financial co-operation in the subrem.cn by facilitating the membership of Fquatoricrl Guinea and Sao Wtte and Principe in the Association of African Central Banks and thrir accession to the clearinc and payments
agrcapent.
32. The Central African Clearing House began its operations in September 1?81, and its headcuarters is located in Kinshasa (Zaire).
(iii) flhe West /African Clearing Pouse
G3. l"he TAfcst African Clearing I-touse, VVCF, lias been playing a very important role in the promotion of trade and monetary co-onerntion r based- rm multilateral payments arrangements in the West /ifrican subregion.
84. MSCE starttjd its operations in July 1976 and the period between 1980 and 19R1 has been marked by a substantial increase in the volume of transactions channelled through it. These transactions are in the form of financial, commercial and capital transfers which account .respectively for A3, 52 and 5 per cent of. the total operations of
85. Ihe year 1980 was also very important in that it marked the implementation of the full scale UMDP assistance prograrro to v&Cr \iitl\ EC2V as the executing agency thereof. The
objectives of the programme arc: mainly to strengthen monetary ^nd financial co-operation of the manber countries, to assist in organizing seminars and study tours for WCB staff manber as well as in procuranent of equintient for them and to provide for WCt\ participation in meetings of sub-regional, regional, inter-regional and international oraanizations concerneri.
vdth TXinetary and financial matters.
56. P.s part of the activities under the tJNDP assistance programme to i-^Ct:, three seminars were held in Itonrovia, JNccra and Freetown in 19B0. Ihe seminars, each attended by more than 100 officials from manber Central and Carmercial Banks, Covernments anc7 other international monetary or financial institutions, v^nrc aimed at finding T.7ays and roans of imiDroving
rayments facilities and rapid expansion of trade in the Kept African Subregion. firoilarly, various study tours were arranged for VEd? staff members to visit and acqu^iint themselves vith the operations of other similar institutions abroad.
(iv) Co-operation with African Centre for ^notary Studies and, thr African DcveloTroent Bank
57. During the pcricd under review, TXT-. maintained, close collaboration with the African Centre for Monetary Studies and the African Dcveloppent Pank. It has, not only participated.
In the various meetings of the policy-organs of the two institutions but also co-operated with them on various activities.
38. The secretariat was. represented, and actively participated at the important symposium en Monetary Theory and Policy in Africa, oraanized by the African Centre for Monetary Studies in Dakar, Senegal fron 21 to 24 January 1980, Participants were able to reflect on and
exchange viev?s on African .^notary Policies that would take into account the economic ear?
social realities of the continent. 'The secretariat also participated in the seminar on ronotary !-tu^agement organized by £CMS in Lcrrie, yccjo frcr ?S Moverher to ':■ Decfj^ber 1981.
ST/ECA/WP.1/11 Page 20
TRADE /\MD FINANCE
&" Africa and eoononic co-operation among developing countries
89. Economic co-operation amoncr developing countries (FCrC) is a concept which is closely associated with the activities of the Croup of 77. The nronrarmio adopts by the Group at their meeting in Mexico city in Scotemher 197P laid flam, the basis for economic co-operatic activities among developing countries and it vas subsequently defined at their Fourth
ftLnisterial Meeting held in Arusha, Republic of Tanzania in February 1979 and endorsed by UNCTRD at its Fifth Session in 'fenila in J'ay 1?7S. In the programed, trade expansion arrcng the developing regions features as one of the most important areas for the prorotion of FCTC and UNCTAD assumed the lead role in its implementation, in collaboration with the F.egional
Econoric Gormissions.
90 Studies carried out by the secretariat have shown that .Africa's trade with the other developing regions is characterized by the exports of raw materials and the iinport of increasingly larger proportions of manufactured and capital goods. i\nother important
feature is the continued deficit sustained by Africa vis-a-vis the other developing regions, although tliis deficit has tended to decrease slightly in recent years as shown in the f table. The over-all deficit in 1980 amounted to $US 1,222 million comparer! to $US 2,51 Trillion in 1979.
Pablo 10. Africa's trade v?ith other developing regions (Millions of US dollars) (f.o.b.)
Region Hbrld
Developing Asias - Fiddle East - Other Asia Developing America - LAFTf,
- Oth.er Latin America Developing Oceania ril developing countries excluding Africa
1975
35 170 806
*50 356 2 227 567 1 660 6
3 039
]Qqports to 197^
£5 1
1
1
3
Sources UN Monthly Eullotin a/ Provisional.
960 144 724 420 860 590 210 2
006
1979 66 120
1 510 900 610 2 872
7RR ■ 2 ^n^
i
4 333
of Statistics
1980 a/
29 2 2
1
o
■
600 4
771 003 768
£43 3AH
1
215
Fuly 1981 1(
1 3 1 1 1
4
*
022 165 741
£24 000 631 369
n 165
Jinports 197R 57
1 1 1
5
£01 719 51?
762 517
QRp.
52°
0 736
V 64
5 2 2 1
"1
6 from
095 255 474 781 0^2 036
£06
897
V
76
7
3 3 1 1
9
?9^ a/
520 44-'".
51?
925
<w 25^
737
'137
91. . .Africa's trade with Asia has consistently revealed a large deficit which increased by 54.07 per cent between 1979 and 1980 amountina to $US ^,673 million. 1ni.s is accounted tor essentially by oil ijrports frorn, the Middle East and manufactured and capital goods from the rest of Asia. Trade with, developing America, on the other hand, shows fairly positive
balances vMch is explained by large export of mineral fuels mainly to the Caribbean countries Excluding fuel, Africa again sustains large deficits in its trade with Latin /^rica. These arc accounted for by irr^orts of consumer goods and capital equipnent fror countries such as Brazil,, ^raentina. I'fcxico and Vrnczuola.
92. /:R mentioned earlier, Africa's export? to the throe other cleveloninct r.aions is up essentially of raw ratcrialc and minerr.] fuels, Rirthcmorr, only a few coir-trirs aro involved in experts to these regions accounting for 75 per cent'o^ tho total ir eac*-' ca<-e rno country breakdown cf African nrinciml exnorter* to""j^tin P^r±ca is comprised o* "-il"
producers namely Libya, Uiocria, Angola, G-abon, Algeria and Conao. "aior ?fri^nn exrorta:
to i-^ia and Astern Zsia are Fanhia, Zaire, ^idan, Kenya, Ghana1, .^bx\t., 'tar*nfcinu«--.' and .anzarua whose exports are corpor, coffee, cocoa, to?., fertilizers, nil see^s wri fruits.
93. C-ivcn the export structure of tb;. Africa recuo- ~rr the rfenc^r-1 iy 3 a'? level of eooncraic dcvelppnent of the majority rf African countries?, the Gxrvmsinn rf Africa-r eamnr tc; tlie other developing regions needs to be built ur on the further nrocossi^a of existinrr raw materials. T<^ that orv?7 tracV, expanri'-r* -irq coenrric co-orxjration ^fr-.cn ^i"rj"o" ™r*
the othcar developing regions chevy br: based on the .-^xploi-titinn rf crnplement.-xi tie^ "
between African and other developinc: countric-s, the GKtaMishmGnt of joint ventures ^^
titc. setting up of bilateral air ^dltil.-tcral trade agreements to reinforce tho role of existing tracle institutiens in the develorina countries.
94. _ In furtlterance of this oj^jective, tho socrotariat decided to mount African trade missions to T&in and Latin America with financial assistance received fron the Netherlandn Government. 1V^ groups of African trade officials and businessnen viaittr! six ?sian and ' five latin ?imerican countries in early 1SH1 to establish direct contact v.dth the business ccmunaties in the countries visited and to explore the potential for their countries' exports,. ?.. second phase of this tvpo of activity is scheduled, for 19^2 ^nrl is intended, arronc; other things, tc assist the countries v^iich participated in the tour in fc-f lowincAi^
on the contacts v/hich have )xxm established, IJhc nrooramG vdll ho extended further tc
include other countries of the Ffricsn region and also covgt Gclectec' countrif^ in "
VTest /i
95. A major feature of the trade expansion prograFrie and vtdch forr.^ r=vrt o^ UWCTTD randate is the establishment of a Rlctoal tysber. of Itade Preferences anong Developing Countries (GSTP). In the Irplcnentation of this proor.arrme, tho Try secretariat in collaboration with the Secretariat of the Organization of African Unity in ^ssistim /African countries in the preliminary r-ee>tings v#iich are being held uncier the aecis of U1-3CT7D to define tlie terns and modalities of their Participation in tin- GSTP. Pursuant to rcoomendations 251 (a) of the LaaoS Plan of Action ..* the OTJJ and re ^rovi
-.ogiGtic sujxx)rt for African iv-rticipaUon in the GSTP negotiations among -V-'Ve
countries and submitted docunont FrArTjfWP/vp.lx .-fries"and ^lobni ryrjtaT, of ^^
PrcforencGs camong revcloping o-untrios (PPT) to the Pfrican c=m.^ 7"ootina which was held in C^cneva from. ?2 to ?.*• July 19^1. r.s a ennccritant. nf. this .activity, the TTT> vzill assist toe African countries in reinforcina co-oreration ^nona ?:tatc ^aclincr Organizationp and in establishing inultinational mrkctina mf: productior. cntcrcricon v^hich constitute seconrlarv
areas of activity in rcdnforcinrr tl'ie C3TP itr-irl.f 3
96. Trade expansion Ix-tween .-frica and the other devolopina roaion^ facr^ a nunber of obstacles which laave already hcen ider:tifi.a^ in nreliminary studios, -hese include, intealM. absence of a transport network, the paucity of trade: information, the lack of trade credit facilities and payments arranganents and, in many African cnurtrie«3 the- non-existence of suitable trade infrastructure. For this reason, the secrrtariat intends to prepare^ separate projects tc examine the- protdms of trade expansion i^fe^en Africa *rx?
oach individual developing rfxricn, i.c, r-sia, T'VJPtern Dsip awl Lptin Pi
