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African countries can prepare for the impact of the euro-zone crisis that threatens to derail economic growth on the continent by improving trade between their countries and fighting inflation, a top World Bank economist said on Sunday.

World Bank's Vice President for Africa, Obiageli Ezekwesili said the traditional partners of Africa in Europe were likely to be affected by the fallout of the European debt crisis, which would squeeze remittances, curb trade and tourism.

Ezekwesili said Africa's economic growth forecast for this year stood at 5.3 percent and 5.6 for 2013, but a recession would likely lead to a 1.7 percent contraction in 2012.

"When you talk about Greece, Portugal, Ireland and the other countries, you then look at African countries particularly linked to them. We keep our eyes on countries like Cape Verde, Guinea, Nigeria, Sierra Leone," Ezekwesili told Reuters on the sidelines of an African Union summit in Addis Ababa.

She said the Ethiopia summit would discuss boosting intra-regional trade in Africa to ease the impact of the recession.

"In Cape Verde, remittances constitute a very important part of its balance of payment, its current account. Its linkage with Portugal has a huge implication for remittances," she said.

"Tourists receipts (from Europe) can have a serious impact, as will the FDI (foreign direct investment). The export of merchandise to Europe will be affected."

Remittances -- money sent home by workers abroad -- are a key source of foreign exchange in Africa after revenue from traditional sources such as tourism, agricultural products and minerals.

Ezekwesili forecast a downturn of at least some 30 percent in some African countries, which she did not specify, by virtue of trade links with their key European trading partners.

She said some of the countries in Africa sent 60 percent of their exports to a particular country in Europe, and were likely to face a downturn in earnings due to the crisis.

Ezekwesili said public expenditure efficiencies were key, and urged diversification of economies and higher farm output.

Europe's sovereign debt crisis has killed off the economic revival that followed the 2008/2009 global financial crunch, and many euro zone economies likely began shrinking in late 2011 and may enter recession this year.

The International Monetary Fund is pessimistic, forecasting a 0.5 percent contraction in 2012 that it says could drag the world into recession.

Ezekwesili said African economies also have to strike a balance between pursuing growth, and keeping a lid on inflation.

She said African countries did well during the last financial crisis because policy-makers maintained macro-economic reforms, but they need to be even more vigilant now. Inflation is in double digits in key economies such as Nigeria and Kenya.

"We still see rising inflationary trends in some of the key countries which will need to be managed," she said. - Reuters

The main objective of this Synthesis Paper is to provide a synopsis of the contents of three related papers, namely: the Issues Paper, the Action Plan and the Framework Document, Road Map, Architecture for fast tracking the Continental Free Trade Area (CFTA), simultaneously developed to respond to the tasks of boosting intra-African trade and elaborating modalities for fast tracking the Continental Free Trade Area.

Background: Features of intra-African trade in brief

Trade is widely accepted as an important engine of economic growth and development. There are many regions and countries of the world that have been able to lift their peoples from poverty to prosperity through trade. Although the African economy is characterized by a relatively high degree of openness, with the ratio of exports and imports to GDP amounting to 55.7% in 2009, trade has not served as a potent instrument for the achievement of rapid and sustainable economic growth and development for many of the countries. As a consequence, Africa remains the most aid-dependent continent of the world, unable to eliminate poverty through trade.

A key feature of Africa’s trade, which has had some adverse implications for its impact on economic growth and development, is its high external orientation and relatively low level of intra-regional trade. Intra-African trade stands at around 10 per cent compared to 60 per cent, 40 per cent, 30 per cent intra-regional trade that has been achieved by Europe, North America and ASEAN respectively. Even if allowance is made for Africa’s unrecorded informal cross-border trade, the total level of intra-African trade is not likely to be more than 20 per cent, which is still lower than that of other major regions of the world.

That African countries do not trade much with each other means that they have been unable to fully harness the synergies and complementarities of their economies and take full advantage of the economies of scale and other benefits (such as income and employment generation) that greater market integration would have provided. There are cases where products and services could have been sourced competitively from other African countries but were procured from outside the continent.

Due to the fact that Africa does the bulk of its trade with the outside world and the exports are heavily concentrated on primary  commodities, the continent has been particularly vulnerable to external macroeconomic shocks and protectionist trade policies. This is evident from the recent global economic and financial crisis which, although not of the making of African countries, has had adverse impact on the continent’s economic performance. In today’s increasingly interdependent global economy, Africa cannot delink itself from trading with the outside world. However, the continent can reduce its vulnerability to external shocks and improve its trade and economic performance if its market integration is deepened and the countries do more of their external trade with each other. Thus, a major lesson to be drawn from the systemic shocks in the global economy is the need for Africa to promote intraregional trade.

Boosting intra-African trade and deepening regional market integration constitute a necessary response to the challenges facing Africa in the multilateral trading system and the global economy. By fostering competition among African countries, they will also assist in enhancing the latter’s’ capacity and prepare them to compete more effectively on the global market.

Basis for a new vision, momentum and action: Setting the agenda

For long, regional integration has been accorded high priority in the development agenda of African countries. The continent’s landscape contains a relatively large number of integration schemes. Inspite of this, market integration in Africa is weak and the level of intra-African trade remains relatively low as indicated earlier. It is in light of this situation that the 6th Ordinary Session of the AU Conference of Ministers of Trade decided to fast track the creation of a Continental Free Trade Area (CFTA). This was subsequently followed by the decision of the AU Assembly of Heads of State and Government to focus its January 2012 Ordinary Session on the theme of “Boosting Intra-African Trade”’ Boosting Intra-African Trade and Fast Tracking the CFTA: New modalities for action.

In order therefore to respond to these tasks, the African Union Commission and its collaborating partners, the UNECA, AfDB, RECs and other partners set to work to develop proposals aimed at addressing the challenges of boosting intra-African Trade as well as fast tracking a Continental Free Trade Area. The results are the production of an  Issues paper, an Action Plan and Framework document for launching the fast track process to accomplishing (achieving) the CFTA . All three documents together form the basis for the agenda setting on boosting intra-African Trade and fast-tracking the CFTA.

Readers can access the ten page synthesis paper here.  The 18th Summit  web page can be accessed here.  It will be updated throughout the summit.

TradeMark Southern Africa

African women want to bring real added value to the development of intra-African trade by implementing their sense of innovation and their dynamism, a spokesman of African women, Algerian Fatima Karadja, declared on Tuesday in Addis Ababa, Ethiopia.

Speaking in an interview with PANA, Mrs. Karadja, vice-president of the economic, social and cultural council of the African Union, said Africa must integrate women into commercial activities by granting them access to bank credits.

'African women have a sense of creativeness and an energy which they can transform into actions in the service of the development of intra-African trade. This is all about carrying out specific activities in favour of these women to start compensating for the imbalance they experience as compared to men,' she explained.

Mrs. Karadja said gender equality must serve the development of intra-African trade.

'In this perspective, which can only benefit Africa's development, women must be further integrated. They have an extraordinary capacity to cope with complex structures . They can therefore through their involvement, bring real added value to Intra-African trade,' she said.

The development of intra-African trade will be the central theme of the 18th summit of the African Union scheduled to take place from 23 to 30 January in Addis Ababa.

According to the different estimates, trade exchanges between the different African countries only represent 12% to 13% of transactions carried out between the Continent and the rest of the world. - Afrique en ligne