African Union Pushing for More Intercontinental Trade

    October 10, 2013


    From VOA Learning English, this is the Economics Report.

    The African Union has held countless meetings and conferences on how to increase trade between African countries, the United Nations Economic Commission for Africa (UNECA) has organized similar gatherings. Yet these efforts have failed to lead to an increase in intra-Africa trade.

    Currently, African countries do only 11 percent of their foreign trade with other countries on the continent. By comparison, Asian countries do 50 percent of their trade with Asian countries. Last year, the world bank reported that Africa loses billions of dollars every year because of trade barriers.

    This past July, a U.N. report urged African governments to provide more support to private businesses, reduce trade barriers and expand public services. The slow progress makes it difficult for companies to do business in surrounding countries.

    Jittu Horticulture PLC is Ethiopia's biggest exporter of horticulture products. The company's general manager Jans Prins says Ethiopia has huge possibilities for trade, but he says there are too many difficulties when attempting to trade with neighboring countries.

    "The major challenge is to reach these markets. And it can either be logistic problems like over flooded border areas, bad roads or no roads, trade barriers, political issues or security issues. For Ethiopia it is very difficult to reach the markets in the surrounding countries."

    Problems getting visas, corruption and high transportation costs are some of the barriers companies face when they attempt to trade within the continent. A truck in Africa will travel, on average, just nine kilometers an hour because of the many security or inspection stations. As a result, 40 percent of the cost of a product is for transportation.

    Intra-Africa trade, both imports and exports, totaled $131 billion in 2011. African Union countries have agreed to make the continent a free trade zone by 2017. Treasure Maphanga is the director of the AU's Trade and Industry Department, she says governments must make that goal of a continental free trade area a reality.

    "I see that in many countries there is political will that exists at a certain level. Intra-African trade does not just depend on one ministry, it does not just depend on the head of state. It depends on the whole government machinery. And coordinating towards a specific goal."

    The African Union will hold another conference on increasing Intra-Africa trade at the end of October.

    That is the Economics Report from VOA Learning English, I'm Bob Doughty.