Forum seeks ways to boost African trade

from Reuters

By Daniel Wallis and George Obulutsa

DAR ES SALAAM (Reuters) - Africa is seeing its strongest economic growth since the 1970s, but this is largely driven by booming commodity prices and the continent needs targeted help to expand trade, a regional forum heard on Monday.

Donald Kaberuka, head of the African Development Bank (AfDB), said African economies grew on average 5 percent this year, and that was expected to rise to 6 percent next year.

"Much of the recovery has been spurred by the price effects (of) rising demand for commodities," Kaberuka told some 300 delegates at the meeting organized by the AfDB, World Trade Organization (WTO), United Nations and World Bank.

"The underlying conditions are still fragile and the structural weaknesses remain the same, implying vulnerability to price shifts. ... The work to be done in trade facilitation is at all levels: before the borders, at the borders and beyond the borders."

In the last decade, he said, the world had seen trade and private sector investment almost vanquish poverty in Asia. But many African nations lacked the capacity or infrastructure to benefit fully from the opportunities of global trade.

The two-day "Aid for Trade" forum in Tanzania's commercial capital is the third in a series of regional meetings that will report to a WTO "Global Review" in Geneva on November 20-21.

The forums aim to help poor countries cement viable trade strategies as pillars of their development plans, while examining where investment in infrastructure by lenders like the World Bank would have the most impact on boosting exports.

Africa's share of world trade is less than 3 percent, experts say, and poor infrastructure make the cost of doing business there much higher. In Kenya, for instance, the average cost of importing a container is almost $2,500 -- or more than five times the cost in Singapore.

"CRITICAL MEETING"

WTO boss Pascal Lamy said the meeting -- while not part of the ongoing Doha Round talks on rebalancing trade rules -- was critical to the region and to the global trading system.

"Aid for trade is not, cannot be and will not be a substitute for better trade rules," Lamy told the gathering. "But it is a complement for a better system."

In a video address, World Bank chief Robert Zoellick said the program could also help donors meet commitments they made at the Gleneagles conference in July 2005, when they pledged to double aid to the world's poorest continent by 2010.

But Tanzania's vice-president, Ali Mohamed Shein, added a note of caution. Many oil and mining companies operating in Africa were owned by foreigners, he said, so more export growth would not necessarily translate into less local poverty.

And aid for trade funds should not be reallocated from existing donor projects like health and education, he added.

"Developing countries merit more attention from the international community for forms of assistance to build capacity for them to be effective players, rather than mere spectators in world trade," he said.