Building capacity to help Africa trade better

“No Trade Without Measurement” – deliberations on Metrology, Export Diversification and Intra-Industry Trade


“No Trade Without Measurement” – deliberations on Metrology, Export Diversification and Intra-Industry Trade

Taku Fundira, tralac Researcher, discusses deliberations on Metrology, Export Diversification and Intra-Industry Trade

In a globalised trading environment, the development of competitive industries has become the focus of many developing economies. In Africa, promoting economic diversification and boosting intra-African trade has gained prominence in debates at the national, regional and continental level. In its quest to create a continental free trade area in line with the objectives of the Abuja Treaty, the African Union (AU) Summit of African Heads of State and Government held in January 2012, endorsed the theme of ‘Boosting Intra-African trade’ and called on Member States, Regional Economic Communities (RECs) and the AU Commission to promote industrial development with a view to diversifying economies and moving away from a reliance on the export of traditional primary commodities.

It is against this backdrop that the United Nations Economic Commission for Africa (UNECA) and United Nations Industrial Development Organisation (UNIDO) hosted an Experts Group Meeting (EGM) in Lusaka, Zambia to discuss and deliberate on the findings of a study conducted to highlight the linkages and constraints to export diversification and intra-industry trade (IIT). This study attempts to contribute to the current trade policy dialogue on boosting intra-African trade in four aspects. The study examines patterns of export diversification and IIT for 49 African economies and also evaluates potential linkages between export diversification and intra-industry trade in Africa.
Informed by the patterns of trade in African economies, constraints towards export diversification and intra-industry trade are discussed and ways of overcoming these constraints are explored. Some of the findings from the study reveal that:

  • Africa lags behind other regions in terms of export diversification, and is actually moving toward further concentration in the products it exports (given the prominent role of fuel in Africa’s total exports, the rising fuel price over the period is one explanatory factor).

  • However there are some African economies have managed to significantly diversify exports between 1998 and 2009 (Guinea, Ghana, Congo, Chad, Cameroon, Angola, Togo, Sudan, Guinea-Bissau, and Niger), while other African economies have showed strong concentration of export products (Gambia, Eritrea, Ethiopia, Democratic Republic of the Congo , Comoros, Central African Republic, Burundi, Egypt, Uganda, Sierra Leone, Rwanda and Mali).

  • With respect to IIT, the study reveals that while IIT levels are generally low in Africa in comparison to the rest of the World. However, when one considers intra-African IIT, the analysis reveals that there is high IIT in manufactured products, thus weighing in on the need for boosting intra-regional trade.

In the same vein, tralac in its recent publication “The Tripartite Free Trade Area: Towards a New African Integration Paradigm,” provided an analysis looking at IIT in the Tripartite Free Trade Area (T-FTA). The analysis is based on the fact that there exists, a general consensus within Africa for governments to recommit to intensifying efforts to develop manufacturing enterprises, given manufacturing’s potential to create more direct and indirect jobs than is the case in the primary and services sector.

We acknowledge the fact that although the use of IIT in identifying industries cannot be treated as a proxy for industrialisation or industrial capacity, evidence from studies indicate that IIT provides a potential opportunity to enhance and support industrialisation especially at the regional level.

The motivation for using IIT is based on the premise that there will be less domestic opposition to a regional industrial development strategy when IIT is high because the T-FTA formation is less likely to result in the elimination of firms or industries within member states, contrary to the case where trade is primarily inter-industry. In a nutshell, with IIT it is easier to transfer displaced resources within the firm or industry than between industries.

Findings from this particular analysis reveal that:

  • The bulk of the industrial sectors in these countries are primary resource-based concentrated in agro- and food-processing products.

  • Manufacturing value addition is generally low and activities are restricted to the first stage of processing or the final stage of blending.

  • South Africa is the only T-FTA country with a complex manufacturing base. Apart from South Africa, other countries such as Egypt, Kenya and Mauritius also have some manufacturing capability relative to the rest of the T-FTA countries.

  • Beneficiation of precious stones and metals remains largely low. With the region’s rich endowments particularly in this group of products, more can be done, thus providing an opportunity for targeted investments to boost this sector.

  • Labour-intensive sectors such as agriculture, textiles and clothing are common industries for which governments in the region have been providing some form of support. However, global competitiveness has not yet been reached and market access issues remain contentious in these sectors.

  • The chemical products sector is also of importance as it provides forward and backward linkages to important sectors such as agriculture and mining, which are essential and provide the building blocks for any economic development in Africa.

  • Capital-intensive industries such as machinery and specialised equipment remain niche markets that require intensive financial investments and may well likely be boosted by increased promotion of foreign direct investment (FDI) into this sector.

Something that was identified as important in the two studies discussed above is the role of agriculture as a key driver for economic growth in Africa. It is important to stress the fact that despite Africa’s endeavours to industrialise, success will depend on the success of agriculture and hence the need for continued support to this sector, not only focussing on productivity but also developing the entire agribusiness chain. We note that in agriculture, despite its relative importance, it is a sector that still faces high tariffs both at the regional and global level. Thus from a regional perspective, elimination of high tariffs and other non-tariff barriers that exist will go a long way in boosting trade.

At the EGM, another issue that was discussed and raised was that while seeking to expand trade both regionally and internationally, it is virtually impossible to underestimate the importance of adopting and implementing international norms, practices and rules in the areas of metrology, accreditation, standardization and certification (MAS-Q), as they provide a vital link to global trade, market access and export competitiveness. Special focus was on the role of metrology.

Metrology is the science of measurement. It includes all theoretical and practical aspects of measurement. It was noted that the increasing importance attached to the equivalence of measurements, tests and conformity assessment procedures has far-reaching effects on trade and the involvement of national economies in the international trade. Going forward, this is the reference against which future national needs in respect of technical and quality infrastructure and future needs for international cooperation should be assessed. As one participant emphasised and coined the term “no trade without measurement.”


Comment received:

Jurgen Hoffmann, 10 May 2012 11:43 AM:

“Dear Taku, thank you very much for a very insightful article. However, you forgot the tariff escalation especially on industrial products. Just to mention one: Copper blisters are tariff free to the Eu, while copper pipes, as used in the construction business, are tariffed at 19%. This precisely the gross margin in copper pipe manucacturing. The tariff on manufactured products must also come down.”


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