Africa export revenues to decline

By Fred SARPONG

Africa export revenue is expected to fall to US$251 billion in 2009 because of the global financial crisis. The affected African countries are mainly the members of World Trade Organization (WTO).
Similarly, oil exporting countries will take the biggest hit, with a shortfall of US$200 billion in 2009.
Dr. Sibry Tapsoba, Head, African Development Institute at the African Development Bank (AfDB), announced this at the 6th Trade Policy Course in Accra last week.
The course was organized by the World Trade Organization (WTO), the Economic Commission for Africa (ECA) and the African Development Bank.
The training course brought together over 100 participants from most of the African countries, including the host Ghana.
Dr. Tapsoba indicated that with exports declining faster than imports, trade balance will deteriorate in most countries.
Exports for 2009 and 2010 have been revised downwards by 40%. As a result, from a comfortable overall current account surplus of 2.7% of Gross Domestic Product (GDP) for both 2008 and 2007, the continent will record an overall deficit of 4.3% of GDP in 2009.
He reiterated that the continent has been severely hit by the financial crisis, with its growth rate forecasted to be at 2.8% in 2009.
Sub-Sahara Africa is expected to grow at 2.5% while middle income countries have been hit severely due to their relatively higher integration into the global economy.
He added that the slowdown in growth is primarily due to a decline in trade-flow.
Africa has made significant and continuous progress in economic growth, as evidenced by the average annual rate of 5.8% before the occurrence of the economic and financial crises.
This relatively good result has been attributed to various reforms undertaken by African governments to stabilize and liberalize their economies as well as stimulate growth.
However, despite substantial progress in reforming the overall policy environment, Dr. Tapsoba said it would appear that many African countries may not achieve the Millennium Development Goals (MDGs).
The reason is partly attributable to a lack of capacity in public and private sectors in Africa, which has been acknowledged as a major impediment to the attainment of poverty reduction goals.
Dr. Tapsoba has said that “it is therefore evident that no matter the amount of financial resources mobilization for Africa’s development, such funds would yield only limited or modest results if countries do not have the human, organizational and institutional capacity to absorb and effectively utilize them.”
He indicated that for the majority of the countries trade represents the means to overcome the structures of small economics on Africa’s development.
According to him, the emerging development paradigm in Africa sees trade, especially exports, as the engine of economic growth and development.
He noted that trade is of paramount importance and positioning Africa in the Multilateral Trading System is indeed one of Africa’s greatest challenges today.
Dr. Tapsoba said in spite of the importance of trade in Africa’s development, its performance over the past three decades has not been impressive.
He emphasized that the continent’s share in international trade has declined from over 5% in the 1970s to less than 2% today, resulting in the marginalization of the continent in the international arena.
In addition, the continent’s share in commercial services is also flat at 2% of world export over the last two decades.
“A number of factors have contributed to Africa’s declining trade share, including external and internal trade barriers, which include supply-side capacity constraints and ‘behind-the-border’ problem,” said Dr. Tapsoba.