Trade and Regional Integration in Africa: AfDB Supports Aid for Trade Initiative in Central Africa

29/10/2010
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Infrastructure constraints and ineffective tools for trade facilitation, such as customs services and standards that make the movement of goods on the continent expensive, are some of the reasons why intra-African trade accounts for only 9.6% of total goods exports in the region. Based on this diagnosis, the AfDB supports the Aid for Trade Initiative (ATI) in several regions of the continent.

The ATI is a multilateral initiative led by the World Trade Organization (WTO)  to assist developing countries, in particular, the least developed countries (most of which are in Africa), to improve their trade-related skills and infrastructure,  thereby joining regional and global markets.  

The ATI is a key issue on which development partners have reached a consensus. Accordingly, the Second Global ATI Review was conducted in Geneva, Switzerland, under the WTO. The first review took place in 2007 in Geneva, two years following the launching of the Initiative in 2005. The next Review will take place in 2011.

Like other regional development banks, the AfDB was invited by the WTO to work together with the organization and ECA to help African countries benefit from the said initiative.

Given its comparative advantages and priority areas identified in its medium-term strategy and its regional integration strategy, the AfDB focuses its support to ATI on the following areas :  identification, prioritization and funding of bankable regional infrastructure projects, trade facilitation, including the improvement of logistics and transport, simplification of customs procedures and harmonization and modernization of customs operations, private sector development, and support for capacity building in trade policy, negotiations and implementation of trade agreements.

In this regard, the AfDB, in collaboration with WTO and ECA, have embarked on preparations for the first Regional Aid for Trade Review in Central Africa, scheduled for the first quarter of 2011. Regional aid for trade reviews are designed to help countries and sub-regions to define and develop national and regional ATI strategies. In order to improve Africa’s trade performance, solutions should be identified and implemented to overcome trade and investment obstacles. Although both activities require substantial resources, the Aid for Trade programme is a potential instrument for addressing these challenges.

As a first step towards organizing the Regional ATI Review, the AfDB, through its NEPAD, Regional Integration and Trade Department (ONRI) organized a preparatory meeting in Douala, Cameroon, from 30 June to 1 July 2010.  The objective of the meeting was to prepare an aid for trade roadmap for Central Africa, in coordination with regional economic communities (REC), CEMAC and ECCAS, and their member countries (Angola, Burundi, Cameroon, Central African Republic, Chad, Democratic Republic of Congo, Equatorial Guinea, Gabon, Republic of Congo and Sao Tomé-and-Principe).

A paper presented during the meeting indicated that average transport costs in Central Africa were among the highest in the world, and the highest in the four African sub-regions (East, South, Central, and West). Another paper also presented a transport facilitation programme on the Douala-Bangui and Douala-N’djamena corridors (multidonor programme) and AfDB-financed operations: study on the construction of an international road terminal in N’djamena, study of an information system on transport costs, study and installation of a radio communication system and stations for controlling axle load along the corridors, construction and equipment of a juxtaposed Cameroon/Chad border post, etc.

In Douala, challenges and best practices for the development of trade corridors were discussed. The challenges of the “corridor” approach include the financing of infrastructure and management structures (membership dues, State contributions, and funds provided by development partners).  Experience shows that efficient management structures contribute to the smooth functioning of infrastructure.

After two days of discussions, a roadmap was adopted with the following measures: first, an evaluation of the status of trade strategies in RECs and various underlying projects; second, an inventory of obstacles encountered at the national level in implementing these strategies and identifying measures to be taken by various governments to eliminate these obstacles; and lastly, ensuring that priority regional projects are consistent with the interest of development partners.

The key conclusions underscore the importance of regional coordination and monitoring by a corridor management structure to overcome fragmented approaches at national level. Such coordination under the ATI will ensure that all interventions are coherent and implemented in an optimal sequence. The ATI work programme for 2010-2011 seeks to “boost resource mobilization for integration, operationalization and implementation”, as underscored by the African Group in Geneva.

In November, a technical meeting will be held to assess the progress made towards the completion of the work programme. The technical meeting will be followed by the Regional Aid for Trade Review at a high-level forum during which the sub-region will mobilize resources for the implementation of priority projects identified in national and sub-regional strategies.  

AFT Evaluation Framework in Central Africa

The AfDB) is responsible for leading the Aid for Trade Programme (ATP) for Africa, and implementing it jointly with the World Trade Organization and the United Nations Economic Commission for Africa.

The draft evaluation framework proposed for Central Africa will be implemented over a 16-month period, from March 2010 to June 2011. It is intended to support the assessment of national and sub-regional requirements in aid for trade and the preparation of coherent national strategies in this area. The draft should also support the preparation of a regional aid-for-trade strategy for Central Africa. The strategy will define investment priorities in trade at the national and regional levels, and specify activities to help the region overcome obstacles to trade. It will reinforce the attention paid to trade in Central Africa, thereby improving the competitiveness of countries in the sub-region, as well as intra-regional trade expansion and trade with the rest of the continent and other regions of the world.

This strategy will also further increase productivity, allow for coordinated improvement of transport infrastructure and logistics, and trade facilitation particularly through the harmonization of cross-border regulations, procedures and standards along priority transport corridors, which will be identified on the basis of a number of common criteria.

The adopted methodology is based on the premise that regional priorities should be included in national development plans, given that it is within these plans that the implementation is often carried out. The project will be implemented in different phases to allow for better control.

Activities

Sub-regional investment proposals, which draw on national strategies, will be designed to define a practical framework for the implementation of aid for trade in the various regions. The AfDB is the project executing agency. It will manage and implement the project in partnership with members of the African Working Group on the Aid for Trade Initiative (ECA and WTO) and the World Bank.

A Steering Committee comprising the AfDB, ECA, WTO, the World Bank, ECCAS and CEMAC, will be established to coordinate and supervise project implementation at the regional level. It will be the main coordinator and consultative organ for the implementation of project activities. It will define  general guidelines and make recommendations for project strategy and objectives. The Committee will also be responsible for periodic review and monitoring of programme outputs. The Steering Committee will ensure that national and regional stakeholders are well informed, and that their views on  project implementation are taken into account when making decisions.  This approach will strengthen and improve communication between agencies and stakeholders. In consultation with the Project Steering Committee, the AfDB will recruit consultants in accordance with AfDB Rules and Procedures for the use of Consultants, to support the project. ECCAS and CEMAC Secretariats will facilitate missions by the consultant to member countries by liaising with involved government officials, obtaining the required authorizations, as well as providing the experts with all relevant documents and putting them in contact with all the stakeholders.