The fifty-ninth executive session of the Trade and Development Board will be held on 23-25 June 2014 in Room XXVI of the Palais des Nations, Geneva.

A report on UNCTAD’s activities in support of Africa is prepared every year and presented to an executive session of the Trade and Development Board.

The report provides an overview of research and analysis being undertaken by UNCTAD with regard to African development, as well as a summary of specific activities, including advisory services and technical cooperation, in each sector that falls under UNCTAD’s mandate.

This report complements and updates the information in the report on the fifty-seventh executive session of the Board in June 2013.

Under this agenda item, a panel will be convened on the topic of monetary unions and regional trade in Africa.

Activities undertaken by UNCTAD in support of Africa

This year’s report on the activities undertaken by UNCTAD in support of Africa covers the period May 2013 to April 2014. As in previous years, this year’s report is organized around UNCTAD’s three main pillars of work, namely research and analysis, consensus-building and technical cooperation. The report continues to document the impact that UNCTAD’s work has on African development outcomes through three main channels, namely through contributions to policy design, formulation and implementation; through capacity-building of African government officials, institutions, private sector and civil society; and through the facilitation of consensus on issues of interest to Africa.

UNCTAD remains committed towards strengthening its partnerships with key institutions of the African region, such as the New Partnership for Africa’s Development (NEPAD) Planning and Coordinating Agency, the Economic Commission for Africa (ECA) and the African Union Commission. For instance, UNCTAD organized a meeting in 2013 to review the “Report of a study on domestic resource mobilization” which the NEPAD Heads of State and Government Orientation Committee mandated the NEPAD Planning and Coordinating Agency and ECA to conduct. In January 2014, UNCTAD and the Planning and Coordination Committee signed a memorandum of understanding to consolidate collaboration between the two institutions.

UNCTAD’s research and policy analysis contributes to more effective design, formulation and implementation of policies in Africa in four major ways: by helping countries to track their economic performance and progress; by stimulating and shaping debates on policy issues affecting Africa’s development; by advising African Governments on policy reform through national policy reviews; by supporting African Governments in making appropriate decisions through analytical tools that inform technical decisionmaking.

Monetary unions and regional trade in Africa

African Governments are strengthening efforts to build productive capacities and transform their economies with a view to laying a better and more robust foundation for sustained growth, employment creation and poverty reduction on the continent. Regional trade and cooperation is expected to play a crucial role in achieving the transformation agenda. It can unlock Africa’s manufacturing potential through, for example, facilitating the development of infrastructure that would lower trade costs and make manufacturing more competitive. It can also promote economic transformation because the composition of intra-African trade tends to be skewed more towards manufactures than commodities, which dominate Africa’s trade with the rest of the world. But African countries trade very little among themselves, as evidenced by the very low share of regional trade in Africa’s total trade.

One of the main objectives of pursuing monetary unions in Africa is to boost regional integration, particularly intraregional trade and investments. Despite the efforts that have been made to promote regional integration on the continent Africa has not made much progress, particularly in fostering regional trade as evidenced by the low shares of intraregional trade in total trade. Over the period 2007-2011, the share of intraregional exports in total exports was 11 per cent for Africa, 21 per cent for Latin America and the Caribbean, 50 per cent for Asia, and 70 per cent for Europe. In this context, one of the challenges facing African countries is how to foster regional trade.

This paper examines how the establishment of monetary unions in Africa can contribute to the achievement of the objective of promoting regional trade. More specifically, it explores the relationship between monetary unions and regional trade and discusses recent evidence on the relationship based on data for African countries. It also highlights the challenges facing African countries in effectively using monetary unions to promote regional trade and draws useful lessons for Africa from the experience of the EMU.