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UNITED NATIONS
'ECONOMIC AND SOCIAL COUNCIL
UNITED NATIONS
ECONOMIC COMMISSION FOR AFRICA
Conference of African Ministers of Trade Tenth Session
Addis Ababa, Ethiopia 17·18 November 1989
'1'IIB ADDIS ABABA STRATEGIES FOR REVITALIZING AFRICA'S 'l'RADE. EXPORTS AND GROii'l'R IN '1'IIB 199Ds
Adopted by
THE CONFERENCE OF AFRICAN MINISTERS OF TRADE (Addis ~baba, Ethiopia, 17 November 1989)
E/ECA/TRADE/B9/25
1. Africa's continued anrl"deepening socia-economic' crisis constitutes one of the most serious ch~I'1er\ges facin,! the cOiltinent. The overall economic growthilite during th«1970s was 3
.6
per'cent
but this was transformed into stead~,'aecl'ines espe'daliy" for the per:trid 19BO-1987 to a rate of only 0.5 'per ceht;" The tradese'ctot performed',,'very poorly and was unable to support sustained (Ji:'6wth' 'rate,,:""'G'towth outputs' in industrial and food production were weak compared'with'" stllong' growth" rates in population. In fact, with population growth rates almost outstripping GDP growth, the living standards for many people 'especially''i:ti'the rural ''informal sector have been drastically reduced' and "ElffWte 6ecl'fiied')as"'eviden~ed'by wide-spread and endemic poverty •. ,i.1,]:. ,'!". - ""'~
2 • The" strategies" propQse'd fot" 'the 199b's' in the' field of trade t<lke into account' the pf.oposal~)contained' in
title
"'Lag'ils"Plan of, Action • r.frica· s Priority progralMne 'for"E86rlomJ.C::"Red'overy' (APPER'P'f9'8EY-"191fO:, the United Nations Programme of Ac't"i:onfot"lifrican 'j{~coiiery"and'Developihent -, 1986"'1990 IUN-PAEERD) and the Afr't'can' AHi\'r~ati"ei 'fratnework to Structural' Adjustinent' for Socio-Economic 'RecbVery':'iilid "l'raniiformaHon'" (AAF'-SAP) . It contains practical and imaginative po'fiib'Y"'i'lfsti'lime'ittli""and 'lheas1::l1,es fotdbmestic. ' intra'-;,frican and international trade'that':';ould need tobe
"implemented to reverse this situation. The strategy is built' on the recogni Hon that the contriilUtion of the trade and export sector to socit:h:iconolnicg:rowth in the process of structural adjustment and socio-economic' ~iansformation and recovery has to be clearly defined to link trade with changes "in 'production. industry and inf'rastructure as well as the supply factor inputs to increase the availability of'goods and services.II. MAJOR TRADE ISSUES TO BE ADDRESSED IN THE 1990s
3. During the 1'9BOs,' Africa' s trade 'p,ftfortnance" ';" domestic, intra-African aila' .interilational - has b!>en disappOinting. '" Domest'fc trad'e has not kept pace
,,;'it'h"
'demand' functions as"'fndicated byseilhus shortages'"of
food, essential, 'dommodities" and services'''ih c. many pa'ttli' 'of"'ilfrica. Intra:"African trade has 'd'ec'i'ined' from an
aV'h:age
of'; about 6 per "cent in the 1970's' to about 4.5 per cent in the 19B05';" I S:i1llila">ly, as a result of stagnation in its exports.Africa's share of world 't'radi! 'dropped from about 4 per cent to about'2 per cene '-'II~tween 1970 and 198B',;"representing a drop of about.'''43 per cent. The price.Jot many agricultural and mfneral primary commoditiesrlif ~~port interest to Atll:'ttla >'collapsed in ,1981 to the lowest levels in fifty: yekl'i'll':'" This was aceOll\paniM"by deterio:tat'ing terms of trade"'~rid fluct:'l1at'i'olfs' 'inLt:h'e exchange ratO'll
,or'
major wo'tid' currencies to whichf'!lnany' Ji~rrean'," natiot.tll burrencies wert! pb9'!1ed. The 'tfombined effects of these Iwas"'a 'drastic reduction in the pertorlhlant.Ii' of the '-'export sector and increi'lSea' balance - of- payments deficits.Lar'!ely, ,lis a result of the declining forei'i;tri' exchange earnings, many African countries were unable to cope with the debt crisis which was manifested in huge and mounting external debt service obligations. The consequences of these developmeftts have been low or decreasing economic growth rates, continued wide-spre,,,f'fnasS"'poverty and declining standards of living.
"
4. In terms of insti tl1tion-building, African 'countries have, since thet960, made considerable achievements in establishing institutions for trade expansion and co-operation. Among such institutions are Central African Customs and
; ~ , - ' • .,"j-'
E/ECA/TRADE/89/25 Page 2
Economic Union (UDEAC); the Economic Community of West African States (ECOWAS);
the West African Community (CEAO); the Preferential Trade Area for Eastern and Southern African States (PTA); the Southern African Development Co-ordination Conference (SADCC); the Economic Community of the Countries of the Great Lakes (CEPGL); the Economic Community of the Central African States (ECCAS); and the Maghreb Union of Arab States. At sectoral level, institutions have been created to promote intra-African trade such as the Federation of African Chambers of Commerce; the West African Clearing House;
the Central African Clearing House; and PTA Payments and Clearing House. Trade and Development Banks have also been established to promote trade.
5. It is, however, disturbing that despite the existence of these institutions, Africa's trade is still characterized by lopsided distribution . and marketing policies in which serious shortages of consumption of goods and food exist side-by-side with surpluses within the same economy. This is partly explained by the low priority accorded to the rural areas in trade, services and information dissemination as well as trade financing and credit.
At the same time, Africa's external sector continues to perform very poorly and there is persistent dominance of primary commodity exports in Africa's external trade largely because African countries have not yet found effective means to diversify such trade through increasing exports of manufactured, processed and semi-processed goods which continue to be a major obstacle in international trade. Institutional and structural problems are also being encountered in the efforts to promote trade between African and other developing countries. The availability of up-to-date trade statistics and information as well as poor marketing strategies and export techniques will also constitute a major problem to be addressed.
6. Projections show that due to rigidities in the African production structures, the trade performance during the first half of the 1990s will continue to be disappointing. Domestic trade will have improved only slightly if priorities will continue to be placed on external trade. This situation will be aggravated by the low purchasing powetof the rural populations especially in the informal and subsistence sectors' in the wake of possible declines in real incomes. At the African level, although intra-African trade co-operation institutions will have been fully established in all subregions including North Africa, the lack of trained human' and· financial resources
·will prevent these institutions from being fully operational. Consequently, the share of . ·intra-African trade to total Africa's trade will still remain at an average level below 5 per cent, but in individual cases such as the Preferential Trade Area for Eastern and Southern African States (P·TA), the share of intra-PTA trade will have grown much faster than its trade with the rest of Africa. Agricultural and mineral primary commodity trade exports will continue to dominate Africa's export efforts in the 1990s and only slight advantage would have been taken of the ACP-EEC Lome Convention to shift the structure of production towards diversification.
7. This problem will arise partly out of the difficulty in interpreting the full and real impacts of the new single European Common Market which will be realized in 1992. This will cast a shadow on Africa's overall ability to penetrate that market or to maintain its current share of trade in the
E/ECA/TRADE/89/25 Page 3
wake of more ferocious competition by the newly industrialized countries (NIC's) from other developing regions. The resulting shifts in the geo-political and economic relationship between Europe on the one hand, and the United states, Canada and the Soviet Union bloc on the other hand, will also present operational policy problems in Africa's external trade relations.
8. In order to address these issues, Africa's trade strategies and policy instruments for 1990s, have to be significantly different from the previous decades. Projections also show that the prices of many primary commodities would not increase to a level sufficient to support sustained growth and development. Therefore, the African countries will have no choice but tl- adopt adjustment programmes and strategies that can ensure its increased share in world trade in manufactured, industrial and processed goods. Tne strateg.
for this period will also focus on inward-looking measures for the development and expansion of domestic and intra-African trade.
(a) The Issues in Domestic Trade
9. The following are the main issues which African countries will continue to experience in the development and expansion of domestic trade.
(i) The inavailability of manufactured consumption goods and services to be traded among the African countries;
(ii) The inadequacy of pricing policies of domestic products and financial incentives for production;
(iii ) Problems encountered arrangements to reverse of domestically produced
in improving distribution and storage the present consumption patterns in favour goods:
liv) Lack of marketing, advertizing and information on domestic products:
(v) Rigidities of consumption patterns and habits, especially excessive dependence on scarce staple food crops: and
(vi) Lack of trained personnel in marketing and relevant training institutions in domestic trade.
(b) Intra-African Trade
10. The following are the main issues in intra-African trade that need to be addressed in the 1990s:
(i) The absence of significant and visible benefits Or gains from intra- African trade especially foreign exchange earnings: and the fear of possible loss of revenue;
(ii) The complexity of rules, legislation and procedures governing intra- African trade and prohibitive tariffs and non-tariff barriers:
E/ECA/TRADE/89/25 Page 4
(iii) The ~bsence and inadequacy of supply and demand analysis for domestically produced goods for intra-African trade and insufficient information of the types and brands of marketable goods:
(iv) The inavailability of trade financing including foreign exchange, insurance and export credit facilities and the problem of establishing credit-worthiness by African traders. This problem is aggravate:::
by the reluctance of commercial banks to provide such credit; and
(v) The lack of competitiveness of domestically produced products vis- A-vis imported goods aggravated by consumer preference of iDlported products by African consumers especially the elite and the urbar dwellers resulting in part from lack of trade promotion and m"l;.~••
u"
(c) International Trade
11. The main issues of concern in Africa's export sector include the following, (i) Narrow range of goods and services available for international trade
coupled by absence of marketing and information on such goods in the world markets;
(ii) The lack of brands and goods identified as African origin and design;
(iii ) The problem of identifying new market channels and resource constraints to exploit those markets through new product linpq ~~
brands;
(iv) Problems in supply dependability to ensure that once captured the markets are not lost to other supplies;
(v) Lack of adequate incentives for export promotion substitutes;
(vi) The problems of ensuring competitiveness including inadequate or inappropriate pricing policies, incentives and exchange rate policies, export duties and export credit and insurance facilities; this is exacerbated by the global technological innovations which render African commodities less competitive with synthetic SUbstitutes;
(vii)
(viii)
(ix)
The lack of transport and communications, including especial1- shipping and containerization;
The continued tariff and protectionist measures including subsidies in the industrialized countries which militate against African products; and
Restrictive trade and business practices by transnational corporations and other foreign investors.
E/ECA/TRADE/89/25 Page 5
III. DOMESTIC TRADE, ADJUSTMENT AND TRANSFORMATION
12. The strategy for the revitalization of domestic trade in the 19905, is to improve the quality of life by inter-alia providing all people, especially in the rural areas, with adequate and CG;}stant supplies of better quality goods, essential commodities and services. The institutional and operational framework for such t,rade entails "he ful:" participatory involvement of all communities at the grass-root level such as local authorities, village associations, co-operatives, formal and informal credit and financial organizations, chambers of conunerce and industry and governlDental and non- governmental organization and the mobilization of human and financial resources in order to provide a sound and solid indigineous base for the transformation of the informal sector. It is particularly ilDportant that adequate recognition and full support should be given to the role of women in domestic trade as well as inveltlnent in Imdl-,cale and egrQ-ill4ustries to satisfy the bailie needs. The main guiding principle is that without stron9 and adequate domestic trade structures, the implementation of programmes for poverty alleviation and runl development become impeded while disparities in the distribution of incomes between the ,~ch and the poor become wider.
13. Strategios and polieiss designed to i.pro". dOlleltic trade performance involves the illlplementatiQII of a number of bade policies which include Illnd reforms that guaranteeI better access and entitlement to land for productive uss as well ..s the enhance....nt of the role of women as agents Of change and the modernisation of the fpod production sector. This would in turn, inctaase the productivity of the informal sector as well as opportunities for gainful employment for a larger number of people and more equitable distribution of incomes and weltare. An important element of this process is greater participation of the target groups in the decision-making process at the national, lOCal, village and grass-root levels to ensure that the local pQpulatiOIl can contribllt:8 to the planning, organha~ion, production, distribution and marketing of goods and services in the national market.
1'_
Therefcsrll,tak~ng inti> aCCO:lnt the deeUions adoptad.a~.theeighth sesilionof
the Confete"ce of African Ministers of ~rade, it is reco~nded that African Ciountrtes shOUld ,,~ ialist double the voi~of
dOlllGjtic ttade by the year2000; In order i;,i:I implll,.rtt th;l./i hr9~t.
1;h.
fOllOwiag, p6iicy inlitrumentil and mechalli.ms need tobe
implemented by the African qOverDmQntii.(i) Thll Ministry of Trade should identity appropriate national institutions to undertake indept~ demand and supply stUdies in their countries, so as to de~ermihe
the
food requirementsot
the population in all areai, in particular the delSlSnd t",r different fPGd grains to form the basis fot domestic trade. If necessary such a study should indicate way. of introducing !'lew staple food grains 1!'1 areasaffecte~ by ~rQ\19ht a!'ld chrOnic tood shortages. To this end, govsrpme!'lts should make specific requests to the United Nations
pev.lQ~ent Pr~r~mme IUNDP) , the African Dev.lo~ent Bank and other fund;l.ng ;l.nstitut~on. to financially support the carrying out of the'.
nuMell;
E/ECA/TRk,DEj89/25 Page 6
(ii )
(iiil
(iv)
(v)
The Z\frican Developme:nt Brrnk , with the collaboration of the Economic Commissi.on for :~_tri(."!a ::.nd commer cio.J. banks, should be r8quC:!i-ted to devise more effective systems for providing credit to small scale tretd0rs, buci ncs s enterprises, small~holder an" medium-scale African farmers in orQ'-.;J:" to imf>~'ove tht.;: environment for increflsing the production and marketjng of simple goods including handicrafts1
The Food 3.nc ;~gricultural Organization (FAO) of the united Na"tions and the ECA should be requ"ste<'i to assist in developing I>dequate national trado distribution netwo:ks throughout the African countries as well as a system of buffer stock both in order to maintain steady price levels and to enSU~t adequate nnd even supplies during periods of high and lew production. Such meaS~res should include the establishment of physical plants and the development of new trade facilitntion measures for the movement of goods and persons, espt;,}cially between the urban and rural are·.:'..s;
Specific measures should be adopted by the Ministries of Transport to assist traders and entrapreneurs -ang!lg'£d in domestic tr:1de to
h~ve full access to transportation and storage facilities to improve their performanc~: and
Better training and skills up-grading. as well as new techniques for trade informat.i.on, market r s soarcn and trnde promotion should b" mad" available to local traders. Special measures should also be taken to ensure ::ldequate credit C\nd financial support to women domestic traders.
IV. STRl',TEGY FOn ENHANCING INT!'h·-{,FRIGIN TRI\DE
15. Tho bas i.c stre.tegy for in":rf'l-African track' in the 1990s is to create
~ sound enabling env i.zonmerrt ir· which nO\'J flows of goods and servicus can take place so as to increase tte share of intra-hfrican trade to between 10 and 15 per cerrt. of ~l.fric'l,·s ~ot"1l tr<1de by the y'Jar 2000. The emerging intornational economic situation suggests that one of the options which African count.ries have is to adopt; inw,'r0-1ooJd.ng policies to encourage trade within the framework of ~h~ South-South co-operation. It is recognized that diversion of trade from traditional North-'South channels would be difficult to attain without some sacrifices to be made by the African countries. However, the trade strategy within the framework of collective self-reliance involves inter- related activities listed in the next few parl>graphs.
(a) Comprehonsive market research and analysis
16. The highast goal of the str"tegy should be to undertake adequate m"rket analysis and strong linkagos bet.,een production on the one hand and marketing and distribution on the other, to inter-alia, reduce the "excess capacity"
in 110frican countri~et In the scazch for an enabling environment, it should
••r .-
E/ECA/TRADE/89/2' Page ~/
be pointed out tho.t the first important elemer.t of intra-African trade policy is that comprehensive market research and analysis should be undertaken to determine the basis for co··operl'.tion taking into account the demand and supply (actual and potential), the structure of production and distribution in industry and aqricultur£, consumer preferences and habits and the purchasing pow~r
of the economies individnally as well as taken together. To this extent, African business ent~rprises should be assisted to participate more effectively
in trade promotion efforts, including participation in sUb-regional and all- Africa trade fairs, roundtables and business tours to other nfrican countries to enhance intra'-African trade.
17. zn Lmpor t.arrt aspect of this strategy is to ensure that the supply and quality of pro<iuced goods is consistent with the patterns of demand especiall:' in the existing sub-region"l economic groupings. t.frican governments should plan industrial production by thoroughly assessing the variations in the demand patterns so as to determine Whether a particular line of production would really serve the needs of the communities. It is also essential that market research should be planned on " subregional or multinational basis to match the demand with the ",xisting or planned production units. There is evidence to suggest that the high incidence of ""xcess capacdcy" referred to earlier in a number of production lines in the African countries, is mainly due to the lack of adequate marketing research and analysis. The coordination of industrial and agriculturnl projects cennot, thereforev be effectively achicvec without an an~lysis and appropriate adjustment of the market structures.
(b) Restructuring domestic proauction in agriculture and industry
18. The second basic element of the intra-African trade strategy is to restructure and harmonize production and distribution in industry and
~griculture at the subregional level consistent with the objectives of collective self-reliance. Therefore, Afric~n governments should agree to co-ordinate their economic policies and pLarmi nq mechanisms to ensure a rapici rate of industrial production for intra-African trade exp~nsion to takn advantage of the trade liberalization policies and instruments identified in (c) below. Therefore, the second element of intra-r.fric"n trade strategy is the re"tructuring of domestic production in agriculture and industry to widen the base for exchanges so as to provide adequate and high quality go~ds
at competitive pric~s. This condition holds true for nIl modes of sub-regional trading arrangements and is of universal applicability in th~ developmen~
and expansion of the base for co-op~rationin trade at the African level.
19. The World Bank should be requested to provide the required resources for this purpose through its Multilateral Investment GUc',rantee Agency (MIGlI) and the joint MIGA/IFC Foreign Investment Advisory Service. The African Development Bank should '1lso be requested to support these programmes.
(c) Trade Liberalization of Domestic~lly-ProducedGoods
20. In order to support the structures and policy instruments laid down in
( a) and (b) abover fifrican governments should make new commitments to ensuro
E/ECA/TRADE/89/25 Page 8
that the trade strategy for the 1990F; will provide an enabling environment through more effective programmes for intra-African trade liberalization ana customs co-operation arrangements. Although it has long been rC"::0snized that the imposition of import duties anc other restrictions on trade between Africa~
countries are major obstacles to fruitful co-operation in Africa, difficulties are still being encountered in implementing this. It should be recognized, however, that these restrictions are, by their very nature, harmful to both the countries imposing them as well as those countries aqainE:t ",~om they ar~
imposed. Therefore, the third element of a more dynamic intra-African trade.
policy is to devise gen..;r<:lly a;::ceptabl~ t ... chniques for traJe :!.iberalization in domestically-produced qoods when these are moved from one country to another.
That strategy should also providu mechanisms to compensate countries from possible loss of revenue.
21. This involves several basic principles. Firstly, countries should grant
"most-favoured-nation" treatment on goods originetinq in other African countrie~
including preferences on industrial and agricultural products. This will have the effect of increasing opportunities for the establishment of ne"' multinational industries within the grouping thereby ensuring a fair and equitable distribution of gains from co-operation in trade. Secondly, it is necessary to develop an effective system to compensate countries for th"
loss arising out of the gradual removal of all barriers anc restrictions 0::
the movement of goods and services among groups of countries. This can bes':
be achieved through the increased use of the machinery already in place such as the sub-regional economic groupings as a basis for intra-African co-operation.
22. Some preparatory work has been undertaken by the secretariats of thp OAU and ECA towards esta:'>li,,:,ing tha African common Ma::ket calleii for in th-o Lagos Plan of Action. The major ob ject Lvo is to provide a regional framework for increased efforts in the removal of trade and customs barriers to intra- African trade in order to facilitate greater co-ordination of policies in trade expansion. In order to rapidly achieve this objective, collaborative action is required as follows:
(i) The Ministries of Transport and Communications should be requested to give priority to the creation or rehabilitation of inter-country roads and rail links likely to encourage the growt~ of in~ra-Africa,
trade with particular emphasis on feeder and access roads permitting for easier transportation of rural produce to the market.
Furthermore, the early completion of the various trans-African highways was stressed.
(ii) Executive heads of sub-regional institutions should be requested to initiate consultations among their organizatic:lr. to co-ordinate their strategies, policies and programmes as a basi3 for acceleratins the establishment of an African Cornmon Market; and
---
{iii)
(0 )
Page 9
;,ppr:.priJ.tC' inscitu":..io:J;i s
o...
I~1(i. be l.-,-"Cj,u:,,;;st<:..d to c s si st; in tqe" ,
establishment <of subrcqf.ona I commodity exchanges to provide up-to- di'it8 Ln fortna t.Lon r:-f the supply and dC'1i"1.nU Eoz- ,""l.frican r~"'W me t e riaLs used a n the pr oduct i.on for intrn-i.frict:'.n trade.
siqni~ic~nt improv~ments in intr~-~fri~a~ tr3c~ inforrnaticn
236 In line with recent developments in informatics: African governments should make significant .i.mp.r oveme nt.a in the exchange of Lrrt r a-Af r i.ce n trade information nne should syst~rnaticnlly monitor 3nd evaluate their trade perfo rmanoo through the adcptLon of e Le ctr ond c data processing~ Such information should facilit~t2 (i) cccocd tnq priority to 1\frican tenders for the provision of goods and s8r~ices off~red by or originating from other nfrican countries; (ii; usa of l.fricnn airlines and shipping lines to increase freighting and transportation of goods for intra-i;friccn trade: (iiI ) information cn appropriate pricing polici~s ~nd other incenti.vos designed to encourag8 intrA-African trade; Qsp~cially in food and food products.
(f) Linkage between intra-hfrican tr~de and other sectors
24. In order to aLl ev Latc the exist.ing weakness in Lnsti t.ut.Lono L structures, African countries should put in place mechanisms to enr-.ble trade to be linked within nation~l development plans through macro-marketing pel icy approach.
Steps should be t-aken t.o link trade development wi th progress in other sectors such es industry, agricul t.ur e , educetion and training: transport and communications.
(g) Enablinq Environment fur PriV<1tc~ '::c:ctcr Part.icipation
25. Governments should d~vise llGW mec::.5UrE:;:S or mechanisms, incentives and support structures to encourage more effective participation of the private sector in intra-[,fric;'\n t.r ade promotion and expansic...-n , To this end, private Lnd Lvi.dun Ls r.nd 5ub-reginn.,~1 nne !"cgi('nJ.l fedcr.:ti.()ns c-·f chambers of cornme r cc , industry and mines should be invited to ccntribute to the decision-making process for Lnt ra-Af r i.can trade. Information of market research and analysis by government.s arid Lrrte z ne t.Lorie L or q an.Lz e c Lona should eLac be made readily available to the private soot.or- f0r this purpose. The World Bank's International Finance Cc r-por-eti.on (IFC) and the MIGlJ. should be requested to incre,'1se its support to onbanco the participe.tion of the privato sector in intra-t.frican trade thrc.:;ugh inter-alia diversifying pr oducc i.cn ':-£ qoods and sezvi.co s ,
(h) Increaoinq Barter ~r~de Exchanq~s
26. African countries should pr~mntc barter exchanges, espocially in raw ma t.e r La Ls and fo-vd , as rJ. means (,;f reducing the n€'ed for foreign exchango for intra-African trade. [i survey shou l.d be undertaken in African count.r I cs to determine the willingness by count r Le s tc onqaqe in such tradE: as well as to establish a list or lists ,-)f gc~:,ds t,-. be exchanged under barter arrangements.
E!ECA!TRADE!89!25
l:lgC :'..0
'OJ. REy.;r~ALIZING THE EXTERUAL ~'~J.'~DE SECTOR
27. In order to reverse the disappointing trends in Africa's external trade
p~rformance experience during tho 1980sr Africa's external trade strategy needs to be significantly ch;)ng~d·.:>r raoclifi,;:,,0.. 'vhc rGvitalization' of the African expox:t sector has to be accorded the highest priority 'in the strategies for adjustmeut nod transformation. T~e four basic elements of such a strategy
~re (a) nignificant decrease in dependence on exports of agriculture 1 ~nd
mineral prime.ry cammodi ties: (b) signif ieant improvements in export earnings capabilities; fc) naw fram"work for North~Southtrade r"lations; and (d) South- Sout.h t:rade and, co-operation.
(n) Decreasina the depend~nc~ on primary commodities
28. The decrease in . .expore dependence on agricultural and mineral primary commodities is Q diffi'cult c'njective to attain in view of the external control elements th~t undcrli~ and influence ~~frican production structures. HowG"Jer ..
a start should be made through the following:
( i )
( i i )
( i i i )
(iv)
AfTican governments shouLd d...:velop' E\. new aiale-gue with transnationi'\l co rpo r at.Lons (TNC) tcmutually agree to reverse the trends in t.ho 'extractive and mining in~us,triee which now 'c'ancet:ttrate on exporting crude miner~ls while only a small amount of processing waS undertaxen.
- To this end, a new compe ct; should be reached cohc::erning the sharing of control of the processing, marketi,ng and .distribution of African pr imary caromodi ties 90 vs to'make' Afric,.,n 'Government, less vulnerable to international chanqes in pricing and exports of such commodities.
New measur-es should be made" to increase the. use of sC,ienca and technology 'and' research and dev'el'opment' to increase the manufacture and semi-manufacture of goocs for exports to the rest of the world;
i\frican countries, with th~ ased eer.nce of the International Trano Centre and th~ Economic Commission for Africa, should undertake new an"" more vigorous 1tamand and supr.Ly enc rnarxet.ing studies ahou l ."
be conducted in the innustrializec countries to id"ntify their patterns that can be m~tched against specific African produced goods end survf.ccs , In. doing so, speci~.l attention should be given to the quality of the goods, price competitiveness, packaging and merchandizing as well as international trade facilitation requirements;
UNCTAD shoul~ be requ"sted to undertake comprehensive studies of til,.; patterns of tr,~de in synthetic substitutes as well as primary commodities.among -the - industrializeu countries so as to determine their iInpacts. on the structures of production and distribution of African prirnGry' commodities.
Governments should create ~ppropriate economic environment at the national level condueive to export promotion and diversification, including such measurieS as introcucing export Lnaurance and crecit schemes. tax exemption for menuf~cture and semi-manufacture exporters, appropr'La t.e pricing policies as well as reinforcing export support instit.utions;
E/ECA/TRADE/89/25 Page 11
(b) Significant improvement in "frica's e"port earnings
29. The recent declines in Africa's export earnings need to be reversed as a matter of urgency. TO this end, African countries need to increase their capacities to understand the working of international market mechanisms and how these are manipUlated by foreign firms and transnationals, through pricing meChanisms, and shifts in supply functions to respond to anticipated demand.
African countries need to restructure their trade strategies with a view to facilitating the penetration of international markets at higher remunerative levels. These can be attained through the following:
(i) The adoption of a more aggressive export drive through the preparation of an inventory of Africa's best quality products to be subjected to a realistic policy to ensure more competitiveness of African goods in the world markets, taking advantage of possible price increases for such productsl
(ii) Defining the framework for new joint venture agreements, involving foreign as well as local investors and manufactures, under which new product brands are to be produced and exported. This should be accompanied where appropriate, by the creation of "export processing zones" and "free trade zones' that would provide an enabling environment for such production1 and
(iii) A systematic evaluation of the cost structures of African exports (i.e. factor inputs, transport and communications, port facilities, shipping and air-freighting, trade representation and advertising) so as to find areas where cost reductions could be achieved. This would. immediately improve the i1r e t a i ne d valueII of AfricaIs exports as well as their competitiveness.
(c) New Framework for Africa's Trade Relations with the North
30. During the 1990s, the strategy should focus on increasing the gains while minimizing Africa's losses from international trade. In addition to the UNCTAD forum, a platform should be found by which particular trade problems of African countries can be brought to the attention of the Group of Seven Most Industrialized Countries for appropriate support. It should be ace.. pt.. d that restrictive and protectionist policies of these industrial nations against African products, while seriously harming the African countries, do also have serious repercursions, both direct and indirect, on the industrial nations.
31. Therefore, the new structure of trade relations should focus on the following important elements:
(i) The African countries should redefine and strengthen the institutional framework for policy dialogue and negotiations between Africa and the developed countries bearing in mind the framework of UNCTAD, GATT and the ACP-EEC Convention. Such dialogue should aim at identifying new areas for North-South co-operation that can halt the economic declines in the African countries enabling them to maximize the advantages from international tradel and
~/~CA/TRAD?/8°/25
?::l.ge 1.2
(ii) ;,s a follow-up to decisions adopt9G at the various sessions of UNCThD, t.he ro should be an agreement for a new frr::mowork fer the tir-arrafor-I
acquisition and adaptation cf science and technology to nfricalg truCe? expansion strp.t(;']y and in particular, the application of t.he Uni tee. Nations Elt:::';~_:rcnic I),)ta lnt<.~rc~vln']~ for I>.dministratic nf Commerce and Transporol: (UN-EDIFliCT) so as to enhance trade between Africa and the developed countries. The d0nor community should be r~qllesteG to finnnc~, on grnnt or G~sy and soft terms, the introduction of computers in African countries t<.: facilitate
int0rn~ticnal trad~o This should be nccomp~niedby intensive training anu skills up-grading in African countri~s for trade promotiun specialists and personnel i.n these areas.
(d) South-South Trnde an~ 2c-aperation
32. In order to foster growth of the manufacturing sector an'; provide the impatus for promotion and expansion of mutually beneficial inter-regionul trade, the following measures are pr0posed~
(i) in the light of til..;:: Caracas Programme of Action on Economic Co-operation, African sub-regional economic groupings should study
ways of cre~ting preferential tr~~G regimes between Africa ~nd other
deve Lopi nq regions as in the context of the global System of TrClC1(O Pref.)renccs amung Developed Countries (GSTP);
(ii ) ,ifrican governments should /;eviso appropriate mechanisms for improving intra-reCJionnl monetnry and financir..l ar r anqemcnt.s in or-lor to eventually crGate Inultilatoral clearing arrangements for interregional trade frlCilitation and grently enhance such trade; and shou Ld Lrnprove the flow and exchange of trade information tc enable the expansion
C\n~-'l promotLcn of interregional trail.e;
(iii) State Traning Organizations {STOal, national trade promction o r qani.aat Lons Cl.S well as chambe r s ,;f commer-ce an,.-l industry, sbouL"
link their demand for goods and. services with th~ s uppLy by their counterparts in the other developing regions including possibilities l)f ...::xploitation of counter-trade 71n(: barter nrrangementsj nn<"1
(iv) Ministers responsible for transport should establish more reliable
tra.nsp,~rtation systems Gf an interregional nature, using where available, n:'lticmal carriers cf participating oourrt ri es , Similarly, communications services among developing nations sh0uld be improved.
VI. IMPLEMENTATION mm FOLLOW-UP MECHi\.NISMS
t i
33. The implementatic1n of this strategy requires a macro-policy approach to the prcmoticn of GOInG:stic, intra-African and international trae1e, taking full account of the objective of self-reliance enbo,;iel~ in the Lagos Plan of Acti~n. A clear a.nalysis of market mechanisms at :~ifforent levels of production and distribution is essential in ·~~rc:er to c"1esign ar1equate an.t appropriate instruments for tr"de promoti on "n~ marketing. Tc this extent,
th~ following fellow-up mechanisms could assist ~frican c0untries, eith~r
individually or collectively, to implement the strategies now proposeu
•
'c-- _
(i)
(ii )
(iii )
( Lv )
E/ECA/TRADE/89/25 Page 13
At the national level, the Minister responsible for trade ana commerce shoul-:: set up, where this noes nnt exist, an Inter-disciplinary Committee on Trace ma-te up of s eni or off i.ci.e Ls from the tra(~£i
t'1'Jricul ture, industry, pLanninc , finance, transport and communicatinn and human resources development sectors, as well as the
reprcsent~tives of the Chambers of commerco and Industry, and State Tr'3ding Organizati0ns; to ~'l.raw up ~ prcgranune for implementing these strategies at the national level. It weule: be the task of thi"t committee to eriaure cJ. sound functicnel relationship between trar.Q and other key sectors of the eooncmyr
At the sub-regional level, a High-Level Inter-Secretariat CcmmittE.:!0 made up of Executive He;:l~s of Sub-regionn.l economi c groupings alrou L:"
be established supported by Directors of Trer~e and Res~arch of the Inter-governmentnl orrjanLz at.Lons engagcf! in intra-African tra/~(!
such as the UDEAC, PTi='l SADCC, CEPGL, MRU, ECC;;S, ECOWAS, CEAO
an:
MAU. The main rnendaee of such a committee wou11 be to identify common areas of interest ano to implement progr~mmes ~imen ~t
promoting trade among the various subregional groupings. This committee weulG also be useful in the work towar~s the establishment of an African Common Market by using these subregional groupings as buil~ing blocks;
l.t the international levelJ the current BurC!8U of the conf or-onco of iifrican Ministers of Tra(~e Sh0Ul~ ccnsti tute an Ad Hcc :::tandinq Committee r:n ~rade ano should be responsible; with the support cf
the secret~riats 0f ECMJ QAU, UNCTAD and lTC, in monitoring the impll:::mentation '.:f all internati.onally agreed programmes anr. measures in international trade of interest to l'~frica0 It should also have the maridz t.e , where appropriate, to con t.act , on behalf of inrlividual c0untries ur sub-r~]ional groupings, selected industrialized countries to r!iscuss mutual programmes in international trade and facilitationo The committee will work cLo aeLy with the ACP secretariat as well as the Group of 77 to ensure co-ornination of efforts ~nd programmes.
The UNOP. W"rlc'! Bank and ADB should jcintly finanoe a cemprehensivG supply analysis of existing and potential manufactured and semi- manufactured praducts in l1frican countries that have n real export potential to fnrm the basis for new neg~tiati0ns for tariff reductions in international trade. Simultaneously a demand ano consumption analysis, including standar~s ann quality control, should be mac0 in the markets of incustrinl countries to determine the marketability of the products so i(lentified in .l'drican countries as well as appropriate institutions an~ trade facilitation mechanisms.
