At WTO Meeting on Aid for Trade in Geneva, AfDB President Presents the Africa50 Infrastructure Fund

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At the invitation of the World Trade Organization, African Development Bank Group President Donald Kaberuka participated in the opening day of the 4th WTO Global Review of Aid for Trade (AfT) on July 8 in Geneva. The AfT review took place from July 8-10 under the theme “Connecting to value chains”.

The global review is the pre-eminent forum for discussing trade and development issues and brought together numerous Ministers, Heads (or Deputy Heads) of International Organizations and private sector leaders to discuss how Aid for Trade can help firms in developing countries to develop productive capacity and connect to value chains.

In his keynote address, Kaberuka observed that over the last decade Africa had witnessed remarkable growth in trade and investments. He noted, however, that despite growth, African firms continued to trade at the lowest rung of the global value chains ladder, exporting primary commodities while importing finished goods – a situation that would not be sustainable in the long run.

The AfDB President underscored the many opportunities for value chains to be upgraded through intra-regional trade and noted that African policy-makers needed to invest in developing a better understanding of regional and global production patterns and how they could plug into them. He emphasized that, to a great extent, one of the structural bottlenecks hindering the competitiveness of African firms was lack of infrastructure. The meeting was informed that the African Development Bank was working on an innovative financing vehicle called the Africa50 Fund in order to leverage the Bank’s track record in infrastructure, Africa’s natural resources, internal savings, external support and capital markets to finance bankable, high-return, transformational regional infrastructure projects.

A joint report prepared by the Organisation for Economic Co-operation and Development (OECD) and the WTO titled “Aid for Trade at Glance 2013” was also launched during the Aid for Trade event. The report highlights the fact that since the last review, AfT flows continued to grow while the outlook for funding remains mixed due to the impact of a continuation of debt pressures and sluggish growth on OECD donors.

In contrast, the report points to the swift recovery of South-South aid, investment and trade since the downturn. It stresses that structural changes in patterns of global trade were becoming increasingly apparent with some 60% of merchandise trade now being in intermediate products. The report concludes by recommending that developing countries and donors scale up their efforts to improve the effectiveness and results of Aid for Trade.