GREAT ZIMBABWE UNIVERSITY
SIMON MUZENDA SCHOOL OF ARTS
NAME: GAPARE MICHAEL
REG NO: M206854
PROGRAMME: BA DEVELOPMENT STUDIES
COURSE CODE: HDES 425
COURSE TITLE: AFRICAN REGIONAL ORGANISATIONS
LEVEL: 4.2
CELL N0: 0771479256
LECTURER: DR PHIRI
QN.EXAMINE THE ROLE OF AFRICAN LEADERS IN THE OCCURANCE OF TRADE
ACROSS THE GLOBE
There is a need to integrate unilateral trade preferences with other efforts to deepen trade and
investment between African countries and advanced countries, mainly the US and the EU,
addressing the structural challenges limiting the region’s export capacity. Additionally, the
international community needs to shift from the current tangle of trade agreements that reinforce
the economic and political fragmentation that has long choked the region’s prospects for
increased integration. Adoption of a more streamlined contract with African neighborhoods”
would facilitate sub regional production networks, encourage sub regional cooperation
initiatives, and help to reduce the risk of cross-border conflicts by increasing the economic
linkage of the member countries.
More importantly, African countries need to undertake bold domestic structural reforms to scale
up the supply capacity of the region by improving digital connectivity, reforming fundamental
institutions of legal frameworks, such as contract enforcement and property rights protection,
maintaining stable and competitive exchange rates and low inflation, lightening the regulatory
burden, improving access to imported inputs through low domestic tariffs, and enhancing
access to infrastructure through the creation of effective special economic zones. Asia’s growing
middle class and its voracious demand present an opportunity for Africa to expand trade with the
region. The foregoing indicates that exports to Asia raised labor productivity, wages, and capital
intensity in Africa. Further, trade with Asia does not crowd out African countries’ exports to the
rest of the world, nor does it cause specialization in material-intensive export. To deepen trade
ties, the region must expand and utilize trade agreements, exploit emerging initiatives to boost
Asia-Africa Trade, facilitate export promotion initiatives, assess the growing Asian middle
class’s consumption patterns to inform export diversification, and promote niche industries
geared towards the Asian export market.
Sub-Saharan Africa’s success in the global market rests on deepening regional integration to
scale up supply capacity and build regional value chains as led by its leaders. The establishment
of the Africa Continental Free Trade Agreement (AfCFTA) presents opportunities to boost intra-
African trade, strengthen the complementarities of production and exports, create employment,
and limit the impact of commodity price volatility on the participants. It also provides for
increased resilience to global shocks, promotes the exchange of a more diverse set of goods, and
contributes to reducing conflicts. Greater regional integration is paramount for AfCFTA to
succeed. The regional leaders must improve physical integration such as cross-border energy and
transport infrastructure and connective infrastructure, strengthen political cooperation such as
harmonizing customs rules and procedures and facilitate business integration such as regional
electronic settlement system, electronic cargo tracking system, and easing restrictions on services
trade. Africa is poised to race ahead in the global market and become a major global player, but
bold reforms are needed to help Africa win the race against poverty and improve the lives of all
of the continent’s dynamic citizens.
Even though global trade has fluctuated over the years, it has also rapidly increased. However,
the structure and pattern of trade vary significantly by-products and regions. Undoubtedly, trade
has come with both benefits and daunting challenges to countries involved, especially in African
nations, where primary and intermediate merchandise formed a substantial share of exports.
Because advanced and newly industrialized economies have better technology and know-how,
manufacturing industries, access to finance, and market than Africa, they have a greater market
proportion in the world trade. Arguably, African countries have been left in the cold as they
struggle to compete with advanced economies. As presented in this chapter, Africa has been
struggling to be relevant in the world market. However, its global share of merchandise trade has
reduced over the decades. This is partly because the continent has concentrated on the
exportation of few primary commodities (i.e., mineral fuels, iron ores, gold, cocoa beans) with
volatile prices and demand in the global markets. The frequent global oil crunch other raw
products are a wake-up call for a rapid industrialization and diversification for competitiveness
in Africa. The World Trade Organization (WTO) has to ensure that defensive trade remedies
should not be the next frontier of protectionism. Finally, for trade, growth, and development to
be stimulated, African countries should urgently open their markets to expand intra-African
trade.
The movement of goods, services, finance, and human resources across national borders has
been driving socioeconomic and political globalization, especially in the past six decades.
Historically, international trade theories have attempted to explain the reasons why countries
should be on the global dinner table. The trade and the benefits are derived from such
transactions. For instance, classical or traditional theories, such as absolute advantage ,
comparative advantage , and Heckscher-Ohlin’s factor endowments , argue that countries
involved in cross border commerce largely because of the relative costs of production or factor
endowments over other nations. Consequently, it has become imperative for nations to trade by
exporting products that they have a comparative or competitive production factor(s) and
importing products that are scarce domestically. This partly explains why African countries
largely export primary commodities and import processed or manufactured goods. On the other
hand, modern trade theories stress that there are many factors beyond the relative costs of
production or factor endowments. They argued that the gains from trade are heavily determined
by imperfect competition, increasing economies of scale, technological advancement, tastes, and
the levels of per capita income in countries. Similarly, world organizations, and scholars,
especially economists, opine that trade is a catalyst for growth in countries that are poised to
develop. Thus, they have some arguments for cross border trade, trade brings a wide variety of
goods and services that spur choices of consumers in the countries involved.
To some extent, trade maintains stable demand and supply that allows efficient exchanges that
stimulate economic growth and development in countries . Also, due to uneven distribution of
natural resources and the climatic conditions across the globe, it has made a trade inevitable, as
it could either complement or supplement domestic production to the countries involved in such
transactions .Although tariffs have been significantly reduced in various products,
commodities that African countries have the advantage to produce and export still face
stringent constraints largely because of restrictions and other distorting measures. Nonetheless,
the trends in trade have remarkably risen since the creation of the World Trade Organization
(WTO), as a body of trade negotiations, policies, and rules. Even though the WTO has made
progress in pressuring countries to reduce restrictions, trade policies and rules may have favored
developed economies at the expense of weak economies, especially in Africa .Against this
background, this chapter aimed at assessing the performance and challenges of trade in Africa
in the present era of trade liberalization. Given that agriculture is the primary export
commodities in Africa, this chapter will also focus on the performance of agricultural trade in
the continent.
The United Nations Conference on Trade and Development (UNCTAD) annual statistical
reports highlited the WTO, International Trade Centre (ITC), and World Bank (WB) as major
drivers of economic trajectory. Historically, between seventeenth and early twentieth
centuries, the share of agricultural trade as a percentage of total global trade was above
50%. This has steadily decreased over the decades as fuels and mining and manufacturing
products have taken over. Even though trade has substantially grown, it has also been diverse
across regions and continents. Developing countries’ share on the total merchandise trade
has also increased. Developed countries’ relative importance as key suppliers in global
markets has declined. Nonetheless, they account for slightly above half of the value of
merchandise exports. World trade fell in 2015 partly as a result of a reduction in oil and other
commodity prices. China was once again the global leading merchandise exporter, followed and
the USA and Germany. These three countries are jointly accounted for over one-third of
world exports in 2015 (Table 1). Also, merchandise exports in individual countries such as
China (13.7% of global exports), the USA (9.1% of global exports), Germany (8% of global
exports), Japan (3.8% of global exports), the Netherlands (3.4% of global exports), the UK
(2.8% of global exports), Italy (2.8% of global exports), and Canada (2.5% of global
exports) were more than Africa (2.4% of global exports) as a whole in 2015. No African
country was among the top 30 exporters of goods and services in the world in the same period
under study. This shows that African regional leaders have a bigger role to play in the regional
conundrum.
On the regional levels, just recorded in Africa as a whole, the share of the African regional
blocs—East African Community (EAC), Economic Community of Central African States
(ECCAS), Southern African Development Community (SADC), and Economic Community of
West African States (ECOWAS)—in the merchandise exports also substantially reduced in the
same period under study. SADC has continued to lead, followed by ECOWAS, just as South
Africa and Nigeria are the first and second largest exporters from the continent. African
merchandise trade has risen faster than those of the developed and developing economies.
However, the continent still accounts for a very low share of world trade, and it has been
decreasing instead of increasing. Although the value of export in Africa has also increased, its
export share as a proportion of global exports has been decreasing steadily. Merchandise exports
from African countries and other least developed countries (LDCs) have been marginally
affected by sharp falls in the prices of crude oil, mining, and other primary agricultural products.
The level of African export merchandise trade rose from $3.4 billion in 1948 to about $92 billion
in 1993. It then increased to reach its peak in 2013 ($601 billion) and steadily declined in 2014
($552 billion) and then substantially decreased to about $396 billion in 2015
This slowdown has been partly occasioned by an ample of other factors, including political
turmoil in some countries in the continent. The overdependence of some oil-producing countries
on oil exports in the region resulted in the decline of Nigeria’s share of the world merchandise
exports from 0.9% in 2012 to 0.31% in 2015. On individual country levels, South Africa,
Nigeria, Algeria, Angola, and Morocco were the leading merchandise exporters in Africa in
2015. The share of these five countries in the continent rose to 47% in 1948 to 57% in 2015.
However, these countries’ export values in the world market shrank from 3.5% in 1948 to 1.4%
in 2015 . There is a long-established custom where most economies in Africa struggled over the
years to gain relevance in the international market due to over-dependence on primary or raw
commodities which are affected by price volatility and low market demand in the international
markets (Verter, 2017) as well as leaders. African economies often rely on few exports, usually
not processed or partly processed for foreign exchange. The contribution of the African continent
to world trade continues to decline as the whole continent contributes less than 3% to global
exports. The diminishing contribution of Africa to international trade has contributed to
worsening poverty in Africa (Verter, 2017). This situation calls for Africa to renew its efforts at
widening or diversifying its exports to include non-traditional exports (NTE) and to venture into
new markets.
Most African nations are operating on the periphery in the product space, which defines their
level of productive knowledge used in the product mix. For instance, countries like Algeria,
Libya and Nigeria operate in primary stage of production and their products are natural or
primary commodities (Diao et al., 2017; Verter, 2017). Therefore, it would be an interesting
exercise to investigate how the nature of their productive knowledge may influence
entrepreneurship activities. All data relating to indicators were drawn from UNCTADstat, the
statistical database of the (Mendez et al., 200, Fojtíková & Staníčková, 2017, Verter,
2017;Gnangnon, 2022). The criteria enable a comprehensive assessment of the countries' trade
participation in each year and the progress they have made over the years in engaging in
international trade.
A common language is indispensable for reaching and maintaining understanding in all inter-
subject relations, including international relations. One element of today’s common language in
the field of international trade in goods is the Harmonized Commodity Description and Coding
System. A common language is indispensable for reaching and maintaining understanding in all
inter-subject relations, including international relations. One element of today's common
language in the field of international trade in goods is the Harmonized Commodity Description
and Coding System which is maintained by the World Customs Organization (WCO). The export
performance of agricultural commodities in the post WTO agreement on agriculture is not
encouraging. Substantial increase of cost of farming due to steep increase of prices of chemical
fertilizers, pesticides and seeds gradually make farming as non-profitable. This also reduces
employment generation in agricultural sector. High improper use of chemical fertilizers and
pesticides.
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