The Leaders of African Union hold a meeting where the expansion of regional trade is discussed
This week, African leaders met on the banner of the African Union in order to discuss one of the major economic issues, which is to increase regional trade and decrease the reliance on extracontinental imports. It was a gathering of presidents, finance ministers, trade experts, and the representatives of the private sector to accelerate collaboration and unlock the potential of Africa to engage in intra-regional commerce.
The problem with Africa is that over decades, the trade has been unbalanced with raw material exports and finished products imports, which does not allow the creation of jobs and undermines the local industry. This is a notion that policymakers today believe is not a solution or solution involving other countries but rather, within the continent of Africa itself.
Intra-African Trade is a Push that wants to be pushed Again.
Africa is an example of a continent where over 1.4 billion individuals live and have enormous natural resources but continue to trade more with Europe, Asia, and North America than with its neighbors. The recent estimates indicate that intra-African trade takes up less than 20-percent of the total trade in the continent, compared to other regions such as Europe or Asia.
This gap was brought to the fore by the leaders at the top as a challenge as well as an immense opportunity. Enhancing regional supply chains, enhancing transport interconnections, and reducing tariffs would generate millions of employment opportunities, balance currencies, and enhance manufacturing.
The highlight of the discussion was the further realization of the African Continental Free Trade Area (AfCFTA), which has been described as having the goal of establishing the biggest free-trade zone in the world, in terms of number of countries joining. The agreement aims at removing majority of trade barriers within the continent. The authorities are optimistic that intra-African trade might grow by over 50 percent in 10 years after AfCFTA has been implemented in full.
Infrastructure And continuing to pose a significant challenge.
As the conference halls were filled with optimism, leaders did not disregard the fact that infrastructure is an essential challenge. The inadequate road networks, low rail links and high shipping costs tend to ensure that the African countries can find it cheaper to import goods than buying them locally. An example is, moving goods between two African capitals is sometimes more expensive as compared to transporting the same goods in Asia.
To solve this, the governments talked about the expansion of highways across borders, modernization of ports and investments in regional railways. Digital infrastructure was also prioritized, and it was called to enhance e-commerce and fintech solutions that will be able to make cross-border payments easier. Various nations declared new public-private arrangements in order to fund massive transport and logistics programmers.
The promotion of Small Businesses and Startups.
In addition to the government policy, there was a lot of emphasis in the meeting on empowering small and medium size enterprises (SMEs). These are the businesses that constitute more than 80 per cent of the employment in Africa but are mostly unable to finance their activities or take advantage of the international market. The trade ministers came up with new initiatives to:
* streamline the custom processes.
* provide export financing
* create regional trade hubs
* provide entrepreneur training.
This will enable leaders to believe that by assisting the SMEs to grow across the national boundaries, Africa will develop stronger local industries without absorbing much of the foreign imports. Key drivers of growth were noted as technology startups, in particular, fintech companies, which will help streamline cross-border payments and enhance smooth trading across the region.
Agriculture and Food Security in the Limelight.
Agriculture is the mainstay of most African economies and leaders emphasized on the need to increase food production in the continent. Recent supply-chain catastrophes across the world combined with an increase in food prices revealed the weakness of the dependence on external imports. The governments believe that through enhanced agricultural trade between African countries, prices will be stabilized and shortages will be minimized.
Some of the policies discussed were:
* regional food reserves
* shared storage facilities
* transnational agricultural markets.
* investment in agricultural modern technologies.
Analysts observed that a good number of nations are growing excess crops which can be sold very easily to the neighboring countries in case the trade routes are more effective.
Youth and Job Creation
Due to the fact that Africa is expected to have twice the population by the year 2050, employment of the youth is an emergency. The leaders on the summit reiterated severally that increased regional trade may form part of the most effective remedies to unemployment of the youth. Both manufacturing, logistics, digital services, and agro-processing industries will benefit in the form of stronger trade network, which will absorb yearly millions of young workers. Education and skills training was mentioned as well, and there were calls to establish a closer cooperation between universities and industries to make the students fueled to meet the requirements of the modern economic world.
A Common View of the Future.
The tone of the meeting was more of hopefulness. Though there are still challenges, leaders showed hope that there can be more unity and cooperation that can change the economic future of Africa. African countries will be able to retain money in the continent, currency of African countries can be made stronger and the countries can be less susceptible to international economic shocks by trading more with one another.
According to analysts, the achievement of the regional trade expansion will not just be based on the agreements but the real-life implementation. It will be necessary to cut the red tape, enhance the level of transparency, and combat corruption to earn the trust of businesses and investors.
Nevertheless, the message of the summit was not mistaken: no growth in Africa will take place through competition.
The recent meeting of the Africa leaders is another goal of integrating economically and achieving collective prosperity. The growth of regional trade is not a mere dream any more, it is becoming a requirement in the fast changing global economy. In case the promises secured during this meeting are converted into action, Africa will be in a position to experience a new dawn of industrialization, employment as well as economic self-sufficiency.
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