The United Nations Conference on Trade and Development says African countries can boost their economic development by expanding inter-regional trade and strengthening road and telecommunication systems. In its annual report on Economic Development in Africa, UNCTAD says regional integration is essential for sustained development.
The U.N. report says new approaches to international development are needed, in light of the global economic crisis. It says Africa's economy would benefit from greater regional integration.
It suggests increased intra-regional trade would promote economic diversification, structural changes and technological development throughout the African continent.
UNCTAD says Africa has made progress toward economic integration, on a sub-regional level. But, it says this has not substantially increased intra-African trade. Nor has it achieved greater investment opportunities or advanced the free movement of people.
Director of UNCTAD's Africa division, Habib Ouane, says Africa has the most fragmented market, compared to other regions. "Among the factors that have hampered regional integration in the continent, weak physical institutional infrastructure is a key obstacle to increasing inter-African trade and investment…Africa currently has the world's lowest shares of regional trade and investment," he said.
Ouane says African countries need to strengthen their regional infrastructure -- that they need to build more and better roads, railways, telecommunications and regional airlines.
He urges countries to pool their limited resources to finance these projects. He says these investments will pay huge dividends. "An investment of $32 billion to improve the main intra-African road network, for example, could generate around $250 billion in trade over a period of 15 years. Regional trade within the West African Economic and Monetary Union would increase threefold if all intrastate roads linking this group of countries were paved. Paving the road linking Mali to Senegal, for example, would increase bilateral trade flows fourfold, while paving the road linking Cote d'Ivoire (Ivory Coast) and Senegal would double trade flows between the two countries," he said.
The report says improvement in physical infrastructure will need to be complemented by improvements in so-called soft infrastructure.
The U.N. economists say countries must harmonize their policies at the regional level. They call for trade facilitation, efficiency in border procedures and the adoption of national policies that help rather than hamper the process of integration.
The report suggests increasing intra-African trade can be a major method of promoting diversification and developing Africa's manufacturing base. And, it says more attention should be given to creating an efficient services sector in Africa.