Economic Development in Africa Report 2013

Inter-African Trade - Unlocking Private Sector Dynamism

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This report argues that for African countries to reap developmental gains from intra-African trade and regional integration, they need to place the building of productive capacities and domestic entrepreneurship at the heart of the policy agenda for boosting intra-regional trade. It also analyzes the range of strategies and complementary policies that will be needed, besides trade policies, to ensure that regional integration enhances African enterprise development and economic development in general. It explores, among others, the role of national and regional industrial policy and the scope for developing regional development corridors. Lessons are drawn from other developmental regional experiences.

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Intra-African trade: drivers, challenges and policy options

The empirical facts and analyses of African trade and investment presented in chapter 1 indicate that there has been a significant increase in the growth of intra- African trade over the past two decades but that the level is still very low compared to the levels observed on other continents. They also suggest that actual intra- African trade is low relative to potential trade, indicating that there are unexploited opportunities for regional trade, particularly in the agriculture and manufacturing sectors. The continent has an abundant supply of natural and human resources, which could form the basis for an expansion of agricultural production and trade. For example, with 733 million hectares of arable land, Africa has about 27 per cent of the world’s arable land while Asia has 628 million hectares and Latin America 570 million hectares (Juma, 2011). However, many countries on the continent are now net importers of food and agricultural products, as shown in chapter 1, and are food insecure. Reversing this worrying trend will be vital to boosting intra-African trade.

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