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All for one, and one for all

Updated: 2014-12-19 09:56
By Li Lianxing (China Daily Africa)

"Good development ensures there is benefaction from these natural resources, and that demands infrastructure. Furthermore, critical development of human resources will ensure maximization of added value and linkage development using proceeds from the market."

Some resource-rich countries have adopted this approach, developing transport links not only to improve access to ports but also broadening links with the economies around them.

He faults the continent's haste to sign agreements with Europe and United States, particularly for setting up export processing areas. That should not be the immediate priority, he says, and he advises governments to focus on creating policies and expanding their markets. This is how growth can be ensured, he says.

"If Africa doesn't put its trade policies and its agreements with global partners or emerging partners in proper order, it will remain at the lower end of the global value chain."

It is expected that by 2017, Africa will have a continental free trade area in place, he says, and that will make African firms more resilient when faced with global economic shocks. The same analogy applies to emerging partners.

"Africa will then switch from being a raw materials supplier to being a value-added supplier."

At the moment, the biggest hurdle is consolidating clusters.

He reiterates that trading blocs are a stepping stone toward integration. By next month, the Economic Community of West African States plans to fully implement its common external tariff. The East Africa Community has a common market, and other blocs have free trade areas and working customs unions.

"All we need now is to remove fragmentation of the African markets as well as the barriers to trade between the different regional economic communities to achieve a continental free trade area in three years."

The resulting market should not only focus on goods, "otherwise the trans-African railway link that China is working on with African countries is of no use if you cannot operate logistics across borders".

China provides a fairer and more level playing field when it comes to trade in intermediate goods or the ability to upgrade in a value chain, he says, and it is much easier to integrate a global value chain led by an emerging economy than one that is led by a well established market.

"I think it's much easier for African countries to compete with emerging countries than established ones."

Africa is at the lower end of the global value chain, and it can only move up by using smart trading policies, Karingi says. The continent has a market edge in agricultural industries and mining.

Adding value to natural resources can be done using the continent's particular approach to mining.

"And we have huge potential with our land. Africa has all the elements, including consumer market potential, to drive transformation."

He believes China has a critical role to play as a result of its increased engagement with the continent. The country can develop a regional approach to its engagements by going beyond dealing with individual countries, taking into account the needs of trading blocs as well.

However, sovereignty of individual countries cannot be ignored.

"These days if China is giving a loan for infrastructure to an African country, it needs to take into account the neighboring countries' needs as well. It's not in the interest of Chinese businesses to have fragmented markets across Africa; it's good to have them consolidated."

There are many possibilities for this to happen, and African leaders are becoming champions of infrastructure development that crosses borders. In the East African Community, the leaders of Kenya, Uganda and Rwanda have taken political action aimed at strengthening regional integration and expect bureaucrats to turn these decisions into reality, Karingi says.


( China Daily Africa Weekly 12/19/2014 page32)

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