Economy

Promoting Pan-African Trade: The AfDB Example

The president of African Development Bank (AFDB) Akinwunmi Adesina, during the 59th Ordinary Session of ECOWAS Conference of Heads of State and Government held in Ghana, had declared that; “The $430 million highway project connecting Enugu and Bamenda in Cameroon, will be completed next year”.

 In a recent follow-up comment on this, the African Development Bank Secretariat explained further that and the transaction was part of its bank’s massive investments to promote increased integration in West Africa as well as other regions of the continent. Many economic analysts have commended the renewed drive to promote pan-African trade and continental business integration that can enhance the standard of living of African residents. 

African regional integration has always experienced challenges over the years. Intra-African commerce is at the lowest in the world. It is around 15%, compared to 54% in the North American Free Trade Agreement, 70% in the European Union, and 60% in Asia. The challenging physical landscape of the continent makes integrating communities, countries, and even the entire continent almost impossible. 

There is also a lack of regional market integration for infrastructure services, particularly in the areas of power, energy, water, and sanitation. This is made more difficult by weak regional economic communities (RECs), which lack the capacity and are inadequately constituted to make or even attract the needed regional investments. 

Read Also: Trade Deficit: Imports from Asia Hit N2.5 Trillion in 3 Months

An integrated regional market for infrastructural services is particularly important for vulnerable countries, which stand to benefit the most from further integration. “As our marketplaces grow in size, regional integration is necessary. Africa must become more integrated, and we must all thrive and prosper together. Breaking down the barriers that separate us is important to our shared future.” says AfDB President Akinwumi Adesina.

Therefore, there is a need to improve intra- African trade. African countries have however taken a conscious effort in promoting trade integration among nations and one such effort was the African Continental Free Trade Agreement (AfCFTA) which formally began on January 1, 2021, following agreements reached last year.  The challenge in this has always been backing the intention with action.

The AfCFTA intends to create a single African market for products and services, facilitate people movement, enhance industrial development, and ensure long-term viability for inclusive socio-economic progress while resolving the issue of various memberships following Agenda 2063. Furthermore, The Africa development Bank has also embarked on various projects that would boost trade and economies of African countries. One such project is the Enugu and Bamenda road construction.

 The Enugu and Bamenda project in Cameroon has a significant socio-economic impact and is ecologically friendly. The project was estimated for a total cost of USD 423 million at assessment, of which the Bank provided a USD 288 million loan and a USD 25 million grant. The project was also supported by The World Bank, Japan International Cooperation Agency (JICA), the governments of Nigeria and Cameroon, and the Economic Community of West African States (ECOWAS). 

This new project places a strong emphasis on member countries’ commitment to addressing poverty through increased commerce. Free trade will create job possibilities, decreasing poverty, and delivering prosperity to everybody. It will also bring about the expansion of the industrial sector and this will allow African countries to diversify their supply chains. In other words, the expansion of intra-African commerce and supply chain diversity will surely help African freight forwarding firms.

By enhancing the efficiency of transportation and the living condition of the population within this zone, the project has enormous potential for economic revolution, reduction of transport expenses, and poverty level. The road has always been a terror for the residents of the region. They referred to the former Enugu-Bamenda Road as “one of the most dilapidated roads in their environment.” Trucks became trapped in the mud during the rainy season, and women were denied rides because they were not viewed as muscular enough to push the vehicles if they became stuck.

Aside from economic advantage, The Enugu-Bamenda Road Project which connects Nigeria and Cameroon has a huge influence in the region. It would open the way for improved regional integration and social harmony as a result of existing socio-political issues between the two nations.

Aside from the above-mentioned project, Mr. Adesina further stated that there are several other projects the AFDB is collaborating with ECOWAS to complete. Some of this project include complete feasibility studies for the Abidjan-Lagos corridor by the end of 2021. According to him, the roadway will connect 85 percent of ECOWAS trade turnover through the corridor.

The African development bank has fully completed some projects which have been an immense benefit to some countries in Africa. Some of these projects include; the Senegambia Bridge would enable trade between Senegal and the Gambia at a quick pace. In addition, the Bamako to San Pedro corridor has increased trade between Cote d’Ivoire and Mali by 34% while lowering border passage time from 24hours to 2 hours. 

Furthermore, the 303-kilometer road connecting Ouagadougou and Lome has cut time from six days to two days. The transport routes connecting Sierra Leone, Guinea and Liberia would benefit 51million people and also the new terminal at Kokota international Airport in Ghana would have a significant impact on regional freight and transportation.

Ongoing efforts made by African governments in promoting regional integration programs indicate the willingness to reduce global isolation however, more can still be done. Commendation should equally go to the Nigerian government for building a rail line linking the Port in Lagos to Niger Republic. This will impact positively on trade relations between the two countries.

 There is need for more cross-sector and cross-border cooperation, improved coordination among government ministries and agencies in Africa. Effective collaboration among a broader variety of stakeholders within the continent would also be required. Regional integration is viewed as a potent tool for promoting inclusive growth and political stability, as well as addressing the problems of global economic, technical, and environmental changes. As a result, African leaders and institutions must relentlessly work hard to foster greater regional integration.

Categories: Economy, Features