African countries urged to dismantle trade, movement barriers to spur growth

African economies must reduce trade barriers and make it easier for people and goods to cross borders to boost growth in the face of headwinds from a commodity price drop, African officials and delegates at the World Economic Forum in Rwanda said.

The International Monetary Fund said average growth in sub-Saharan Africa would fall to its lowest in nearly two decades this year, at 3 per cent, with commodity exporters struggling and government finances coming under pressure. “As we develop the regional markets in Africa, we’ll reduce the susceptibility of Africa to these global commodity price shocks,” African Development Bank (AfDB) President Akinwumi Adesina told a news conference in the Rwandan capital Kigali.

Trade between African nations accounted for just 11 per cent of total transactions, compared with Asia where regional trade accounted for 40 per cent and Europe where it was 70 per cent.

Adesina said there were some positive signs - Africa-to-Africa investment had climbed, rising from $10 billion (Sh 1 trillion) to $50 billion (Sh5 trillion) a year - although he didn’t give a time frame. But he said high tariffs and non-tariff barriers such as poor roads, railways and ports hindered progress.

“If there were a real willingness to dismantle trade barriers, you could get growth gains regardless of what was happening in the rest of the world because of broader markets,” said Razia Khan, Africa economist at Standard Chartered Bank. While there are several trading blocs in Africa, few have acted swiftly to completely dismantle barriers to commerce, though the six-member East African Community has moved further than most to ease trade across borders. The EAC comprises Kenya, Tanzania, Uganda, Rwanda, Burundi and, most lately, South Sudan.

Kenyan President Uhuru Kenyatta said slower growth on the continent should spur closer regional trade relations. “It is a wake-up call,” he said.

Like several other African nations, Kenya is building a new railway to speed up transport links between the capital Nairobi and its main port Mombasa. The line will extend to neighbouring Uganda, and could eventually be connected to Rwanda.

Ugandan President Yoweri Museveni said in Kampala on Thursday that the new rail link would cut the cost of transporting a container from Kenya’s coast to his landlocked country from $3,500 to $1,500, reduce the time it took from three days to one, and prevent roads being worn out by trucks. —Reuters

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