IMF suggests ways for Africa's integration in global trade

Washington- US (PANA) -- The International Monetary Fund (IMF) has suggested that trade liberalisation and reduction in transaction costs could reverse Africa's growing marginalisation from global trade.
In a report titled "World Economic Outlook for 2001" released in Washington Thursday, the Fund indicated that Africa's share of world trade had declined from more than 2 percent in the 1970s to less than 1 percent today.
As a result, the continent has lost income opportunities amounting to 68 billion dollars from 1950, the IMF stated.
A major contributing factor to this marginalisation, the report noted, is the lack of openness of African countries to trade and the high cost of business transactions in the areas of telecommunications and transport.
Even though more African countries had made significant strides since the 1980s to increase openness to international trade, the continent has the most restrictive tariff regime in the world.
According to the fund, the marginalisation of the continent had not been helped by the proliferation of regional integration initiatives.
These have diverted Africa's trade from advanced economies.
"There is strong evidence that greater openness to trade can boost long-term growth, largely through the impact on domestic competition and investment," the report stated.
To ensure that regional integration contributes to Africa's integration in the global trading system, the IMF report recommends that African countries respect their commitment to regional liberalisation.
It advised that "African countries could also seek reciprocal free trade agreements with advanced industrial country partners.
" By linking up with advanced countries, Africa would derive a number of benefits, including prospects for greater commitment to policy, more secure market access for its products and attraction of foreign direct investment and technology.
"Africa's trading partners can also play an important role in facilitating Africa's integration with the world economy," the report said.
It added that Africa's exports would rise by 2.
5 billion dollars if the European Union, Japan, Canada and the US remove barriers on African trade.
The report argues for implementation of trade liberalisation together with measures at the domestic level to strengthen the tax base and institute effective social safety nets to protect those who might be affected by adjustments in resource allocation.
Besides trade liberalisation, the report also calls on Africa to enhance the efficiency of its infrastructure through privatisation and effective pro-competitive regulation.

26 april 2001 21:57:00

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