Bridges Weekly Trade News Digest • Volume 13 • Number 12 • 1st April 2009
New Infrastructure Initiative Launched as African Trade Plummets
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Three African economic communities announced plans last week for a major new infrastructure initiative meant to boost trade flows on the continent. With support from foreign donor governments, the groups aim to create a reliable and efficient transport network across eight African countries, from South Africa to the Democratic Republic of the Congo. The project, dubbed the North-South corridor, is estimated to cost $1 US billion.
Juma Mwapachu, secretary-general of the East Africa Community, says that the continent needs proper governance structures to augment regional integration.
“Infrastructure is what unlocks space so if it is not delivered, we cannot optimise the large market space we have created,” said Mwapachu.
Officials expect the project to give producers access to more regional and international markets through faster border crossings, improved transportation networks, along with measures to revamp power supply and transmission. WTO Director-General Pascal Lamy, who will attend a meeting on the project in April, says the North-South corridor will help promote development and alleviate poverty.
“Such initiatives have never been more urgent than in the current global economic climate,” Lamy said.
Indeed, of the 26 countries that the International Monetary Fund has flagged as “highly vulnerable” to the effects of the global economic downturn, half are in Africa.
Last year, thanks largely to a spike in commodity prices, Africa racked up US$ 800 billion in trade revenues. But recent predictions say that that value could slide by 20 percent to 25 percent for 2009 and 2010.
Several factors have triggered the continent’s economic troubles: a drop in aid from rich-country donors, a fall-off in investment from overseas, and a decline in money sent home from Africans who have moved abroad have all contributed to the downturn. To make matters worse, the global credit crunch means that African exporters are struggling to get the loans they need to ship their products to market.
Dominique Strauss-Kahn, IMF’s managing director, at a conference this month stressed how Africa must not be forgotten during the global downturn.
“This is not only about protecting economic growth and household incomes – it is also about containing the risk of civil unrest, perhaps even of war. It is about people and their futures,” said Strauss-Kahn.
ICTSD Reporting; “Zambia’s Copperbelt Reels from Global Crisis,” THE WASHINGTON POST, 25 March 2009; “Africa trading blocs plan to launch major infrastructure initiative,” CHINAVIEW, 25 March 2009; “African trade to shrink up to 25 pct: Afreximbank,” REUTERS, 26 March 2009.
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Effective ways must be urgently found of ensuring that Africa does not fall further behind. President Obama pledged during his inauguration speech to help Africa meet its multiple challenges. If there is one leader Africa can count on after many years of failed promised, that leader is Obama. But let it be known that America cannot solve all of the continents problems. That is why it is encouraging that such ideas as this are very welcome. There is overwhelming evidence that if well planned and executed, large infrastructure programmes such as road and railway can have major beneficial impact at a local and regional level. It is imperative therefore that those who are responsible ensure that the right are made at local and regional economic levels so that the benefits of various stimulus packages are realized the ordinary men and women.