Africa's farmers fret over Brexit amid calls to boost regional trade The Guardian
African countries must trade more between themselves to be better equipped to deal with shocks in the global economy such as that caused by Britain’s vote to leave the EU.
Speakers at a forum on the sidelines of the 14th UN Conference on Trade and Development (Unctad) said enhanced intra-African trade would reduce poverty and help development at a faster rate than most other reforms and would make regional blocs within the continent more attractive to investors. It would also help to cushion against dramatic developments in other markets.
The UK-based Overseas Development Institute expects the post-Brexit slump in the pound to cost developing countries nearly $4bn (£3.1bn) in the coming year, with exports projected to decline by approximately $500m.
Countries such as Bangladesh, Mauritius, Fiji, Belize and Kenya, whose flowers, garments, sugar, bananas, tea and coffee exports find a large market in the UK, are forecast to be hit particularly hard.
Experts say boosting trade within Africa would go a long way towards mitigating the effects of a possible slowdown in exports.
“No continent trades within itself less than Africa,” said David Stanton, director general of TradeMark East Africa, a non-profit that promotes regional and international trade. “Trading more between and within nations in the region would mean they would be far less exposed to shocks elsewhere. It would also make them more attractive to foreign direct investment and, ultimately, less dependent.”
Trade between African nations stands at a modest 10%-12%; Europe’s intra-regional trade stands at 60%, and Asia at 40%.
This has been blamed on a wide range of regulatory barriers that make it extraordinarily difficult for a trader on one side of the border between Kenya and Uganda, or Rwanda and the Democratic Republic of the Congo, for example, to cross borders and sell farm produce.
The UN’s latest Economic Report on Africa (pdf) found more than 80% of the continent’s exports are shipped overseas, mainly to the EU, China and the US.
Anabel González, senior director of the World Bank’s global practice on trade and competitiveness, told a forum in Nairobi in December that in southern Africa, a truck serving supermarkets across a border may need up to 1,600 documents in permits and licences.
She described one supermarket chain reporting that it lost $500 each day a truck was stuck at border points due to slow customs procedures, and spent $20,000 a week on securing import permits to distribute meat, milk and plant-based goods to its stores in the region.
“If the residents of San Francisco faced the same charges in crossing the Bay Bridge to Oakland as do residents crossing the Congo river between Kinshasa and Brazzaville, a similar distance, they would pay more than $1,200 for a return trip,” she said.
“As a result, passenger traffic at this obvious focal point for cross-border exchanges between the two Congos is around five times smaller than that between East and West Berlin in 1988.”
Speaking in Nairobi at the Unctad conference, Pascal Lamy, former head of the World Trade Organisation, challenged authorities in the region to make it easier for businesses to trade across borders and do business more generally. “Apart from making trade possible, you have to make trade happen,” he said. “You have to address obstacles to access to the market through things like infrastructure projects, but at the same time you must ensure that people have the tools they need to trade including access to credit and the information they need.”
Josephine Kizza, a Ugandan farmer representing a collective of 6,000, mainly female, farmers who grow bananas, avocados, pumpkins, jackfruit, watermelon and plums, and whose herbs and spices are finding a growing market in the UK and the EU, said it was essential to move quickly to address the uncertainty following Brexit.
Kenyan tea farmers are also anxious to see what kind of deal Britain can negotiate for access to European markets. The country is the world’s biggest exporter of black tea and enjoys a large market in the UK, but 17% of imports are blended and re-exported to the EU.
Stanton said the lesson regional blocs should draw is to avoid complacency and ensure citizens are more engaged and kept aware of the benefits of integration.
“Maybe this is a wake-up call,” he said. “You need to ensure the public understands how the East African Community secretariat works, build strong links between capitals and keep the people closely informed so that they appreciate both the gains from working together as a bloc and the risks if it falls apart.”