Press Conference by United Nations Trade Chief on Africa's Development

24 June 2009

Press Conference by United Nations Trade Chief on Africa's Development

24 June 2009
Press Conference
Department of Public Information • News and Media Division • New York

PRESS CONFERENCE BY UNITED NATIONS TRADE CHIEF ON AFRICA’S DEVELOPMENT

 

Regional integration in Africa was essential for sustained development -- especially within the context of the current global crisis -- and could help to enhance competitiveness, the Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) told correspondents today at Headquarters.

Launching UNCTAD’s report, Economic Development in Africa 2009:  Strengthening Regional Economic Integration for Africa’s Development, Supachai Panitchpakdi said that Africa’s growth in recent years stood at 5 to 6 per cent and had enabled countries there to achieve some of the targets of the Millennium Development Goals.  Those achievements were now threatened by a drop in exports, remittances, foreign direct investments (FDI) and official development assistance (ODA), with growth across the continent expected to amount to not more than 3 per cent as a consequence.

He said regional economic integration could help to enhance economies of scale, thereby making Africa more attractive for investments on a regional basis in such areas as infrastructure, production capacity-building and lessons learned.  Regional integration efforts had been made in the past; there were now 14 major economic groupings, including the Economic Community of West African States (ECOWAS) and the Southern African Development Community (SADEC).  Intraregional trade, however, was rather insignificant and stood at 9 per cent of total exports, as compared to 45 per cent in Asia.  While African exports to global markets were mainly products of the extractive industry, intraregional trade was more diversified.

Among factors that had impeded trade creation more than anticipated, he said that economic integration had mainly occurred without private sector involvement and that implementation of agreements on such issues as tariffs was slow.  Other factors included:  production of similar goods across the sub-Saharan region; overlapping mandates and regulations among groupings; and, most importantly, the high cost of transportation, which was 136 per cent higher than in other regions –- and higher still for Africa’s landlocked countries.  Intraregional investments were also low -- 13 per cent of total FDI, and labour mobility was inhibited by regulations and political factors.

As policy options to address the issues, Mr. Panitchpakdi mentioned, among other things, the need for a strong political commitment to move ahead with regional integration.  He welcomed, in that regard, the recent announcement by three groupings of their intention to merge, in order to create a large free trade area.  African countries and groupings should also be more assertive in their Economic Partnership Agreements (EPAs) to push for strengthened regional integration.

He said there was also a need for regional infrastructure investments.  As an example, if cross-border roads in the West African Economic and Monetary Union (WAEMU) were paved, trade would increase threefold.  “Soft” infrastructure, such as customs, tariffs, and delays at borders, should also be addressed.  Investments on a regional basis could enable large regional projects in the area of agricultural development, water management, infrastructure and intra-State transportation.

Asked why the Maghreb region had not been included in the report on regional integration, Mr. Panitchpakdi said there had not been much movement in that regard, maybe because of past problems between the countries in that region, and also because some of those countries were linking themselves with Mediterranean efforts.

Addressing a question about whether “brain drain” was caused by the fact that African Governments could not utilize existing expertise, he said that the “brain drain” was mainly caused by the high unemployment levels in those countries.  Intraregional migration of skills could be beneficial to both sending and receiving countries.

Regarding a question about the benefits for Africa of some non-African countries leasing land, for instance in the Sudan and Madagascar, for their own agricultural production, he said the United Nations wanted to create an atmosphere for more investments in agricultural development in Africa, but those investments should be properly handled.  The United Nations system wanted to function as an “honest broker” in that regard.  Studies were being carried out with the perspectives of both sides –- Governments and investors -– in mind.  However, the leasing of land in that way should be prevented.

To a question about China’s investments in Africa, which were, according to the correspondent, mostly in the extractive industry, he said that investments from Asia, including from China, had been instrumental in creating South-South cooperation.  Those investments were not limited to the extraction industry, but were quite diversified, and included tourism, information and communication technology and transportation.  The United Nations system was trying to help steer investments in the most transparent ways to benefit the people of Africa.

Asked about debt sustainability during and after the current global crisis, in the context of stimulus packages, he said there was, indeed, a fear that recovering economies of developing countries would end up in a “debt bubble”.  There was a drop in revenues at the same time that there was a need for stimulus measures through fiscal expenditure.  Governments concerned needed some policy “space”.  Official development assistance, therefore, should not be extended on a loan, but on a grant basis.  Repayment capability in some African countries was now very low; they might sink into a recession or have to default on their debts.  A medium-term plan for debt restructuring, therefore, was needed.

It was true that landlocked countries in Africa would benefit from modernized river transportation, he responded to another question.  That matter had been addressed in a former report.  River transports were cleaner and cheaper.

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For information media • not an official record
For information media. Not an official record.