The Potential of Aid for Trade to Accelerate Growth and Development in Africa

1. Economic Commissionfor Africa The Potential of Aid for Trade to Accelerate Growth and Development in Africa Dialogue of the Executive Secretaries with the Second Committee October 2007 Abdoulie Janneh, ECA

2. Outline • Trade as a development pillar. • Challenges for African countries in international trade. • Aid for trade and Africa: how the initiative is addressing Africa’s priorities. • ECA’s involvement in the aid for trade.

3. Trade as a development pillar • The global partnership for development under the MDGs has trade as one of its central components. • Evidence shows that trade plays a catalytic role to growth: • Through static and dynamic effects, • It reduces inefficiencies in the economy, leading to improved competitiveness. • The Asian countries experience is a good example.

4. Trade as a development pillar (cont’d) • The 1980s and 90s witnessed major consensus on role of trade which underpinned global trade reforms. • But since end of 90s questions emerged regarding Africa’s gains from trade mainly due to lack of improvements in its share in the global economy. • This has motivated a new look as to how best to make trade work for development and help the MDGs. • For Africa, this requires addressing its challenges in international trade.

5. African Challenges in International Trade: External • These relate mainly to global trade environment and include market access and distortions in international prices: • Market access: tariff peaks; tariff escalation; and non-tariff trade barriers. • Price distortions as a result of: export subsidies and domestic support policies.

6. Africa’s Challenges in International Trade: Internal • AFT likely to be felt most in overcoming internal trade challenges, which include: • Weak supply capacities • Weak ports and transportation infrastructure • Trade facilitation • Trade finance • Limited research and development resources • Institutional constraints • Lack of skills towards better quality products

7. Aid for trade initiative: how it’s addressing Africa’s priorities • Through its broad objectives: • Enable developing countries use trade more effectively. • Build supply-side capacity to access markets and export more. • Help facilitate implementation and adjustment to trade reforms. • Assist regional integration. • Assist smooth integration into world trading system. • Assist implementation of trade agreements.

8. Aid for trade initiative: how it’s addressing Africa’s priorities (cont’d) • Its scope clearly address Africa’s internal challenges in international trade: • Dealing with constraints related to trade policy and regulations. • Trade development e.g. business services; finance and investment. • Trade related infrastructure development e.g. roads • Support for building productive capacity towards diversification. • Meeting adjustment costs to trade reforms

9. ECA’s involvement in the aid for trade • Strong involvement of ECA in trade issues – through support to African negotiators. • A fully-fledged African Trade Policy Centre has been focusing precisely on how to overcome Africa’s internal challenges. • ECA is a member of the board of aid for trade – it jointly organised with ADB and WTO the African review. • ECA is preparing the participation of African countries in the Global Review in November 2007.