Boosting Intra-African Trade

The AU believes that promoting intra-African trade will be an essential factor to achieve sustainable economic development, to generate employment and effectively integrate the African continent in to the global economy.

A decision was taken by the AU Assembly in 2011 on boosting intra-African trade and fast tracking the continental free trade area (CFTA) to reach these objectives. It endorsed the framework, road map and architecture for fast tracking the CFTA and the Action Plan for Boosting Intra-African Trade. The following African Union Summit in 2012 focused on precisely this.

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Africa currently pursues an integration agenda that eventually leads to the creation of a continental market. Regional integration is believed to develop larger markets where competition is fostered leading to improved policy stance on many issues on the development agenda.

Intra-African trade is crucial to build competitiveness higher in the value chain where more value is created but it calls for harmonised trade policies and the dismantling of barriers to trade.

The prioritised obstacles to overcome in order to boost intra-African trade are to broaden Africa’s economic and market space by establishing a CFTA, address supply-side constraints and weak productive capacities, address infrastructural bottlenecks, eliminate trade barriers through improved trade facilitation, enhance opportunities for intra-African trade through trade information networks, address financial needs of traders and economic operators through improved trade finance, address adjustment costs associated with free trade agreements and trade liberalisation to ensure equitable outcomes for member states.

The Action Plan outlines the activities required to overcome the above-mentioned obstacles. Efficient and coherent trade policies promoting intra-African trade are fundamental to reach the overarching objective. Trade facilitation is another focus activity, as there are still a vast amount of barriers to trade, hindering regional and continental integration, such as road blocks, customs and transit procedures, documents and regulation. And increase in productive capacity is crucial to overcome the insignificant share of Africa in global- and inter-African trade. A focus will also be on activities within trade-related infrastructure as lack of infrastructure has been a factor in the failure to diversify and lack of competitiveness of Africa. Trade finance to develop and strengthen financial institutions and mechanism to promote trade and investment, trade information and factor market integration (to enhance mobility of labour, capital and enterprises) are the remaining activity areas of the Action Plans.