The private sector, enterprises and productivity

Africa has a rich and long history of attempts to promote trade through regional economic cooperation. However, the focus of regional trade initiatives on the continent has been more on the elimination of trade barriers and less on the development of productive capacities, particularly in manufacturing and agrorelated industries. While lifting tariff and non-tariff barriers to intra-African trade is important, policymakers must also foster entrepreneurship and address supplyside constraints inhibiting the ability of the private sector to produce and export. Elimination of tariffs across countries will not have any significant impact on intra- African trade if market imperfections on the input side (for example in credit, labour and capital markets) are not adequately dealt with. In this regard, there is a need for sustained measures to boost productive capacity to enable African countries to meet regional demand that may be created by eliminating barriers to regional trade. If this is not done there is a risk that domestic firms will be unable to take advantage of the market access opportunities created by regional integration, leaving ample space for foreign firms to capture most of the benefits from the process, with dire consequences for domestic enterprise and industrial development.

Related Subject(s): Economic and Social Development