Trading in Africa to be ramped up through new UK Government Initiative

09 February 2011

The UK is to launch a new initiative to boost African trade through reduced bureaucracy, improved transport infrastructure and more efficient border crossings Andrew Mitchell said today.

The African free trade initiative (AFTi) will see Britain provide technical experts to unblock issues that continue to hold back economic growth across the region.

This will include advising African countries on the design of border posts, infrastructure investment and analysis of major transport bottlenecks.

Expected results include cutting the time it takes to travel the length of Africa's North South Corridor from nine to seven days and reducing the journey time for goods lorries from Mombasa to Uganda and back to Mombasa by three days.

The initiative will help to break down trade barriers and open up opportunities for entrepreneurs, both large and small, to access new markets and invest in expanding production and trade.

Three key areas that have been identified for AFTI to tackle are:

• Tariff barriers to trade such as the duties imposed by governments on imports from other countries. It will provide expert advice to national governments and regional bodies on how to bring down tariffs to create a more favourable trading environment and support in lobbying for changes in international trading agreements through the G8 and G20;
• 'Soft' barriers to trade like border post bureaucracy that makes it difficult for companies to transport goods across borders without spending large amounts of time on different sets of paperwork. To tackle this it will help governments to renew and coordinate rules and regulations to reduce bureaucracy and speed up border crossings. It will also aim to develop monitoring systems to help truckers report unofficial barriers such as road block; and,
• 'Hard' barriers to trade from poor infrastructure. Crumbling roads or poor rail links significantly increase journey times and reduce the number of potential trading partners because of access difficulties. AFTi will provide analysis of the major bottlenecks which are inhibiting trade and provide advice on which projects would be suited for Public Private Partnership investment.

AFTi brings together the work of a number of regional trade initiatives in Africa who will work closely with AFTi to improve trading conditions.

The International Development Secretary highlighted the AFTi's aims to "oil the wheels of trade" by making business quicker, easier and cheaper as part of a push to unlock Africa's economic potential and enable people to pull themselves out of poverty.

Andrew Mitchell said:

"The African Free Trade Initiative clearly demonstrates the UK's commitment to helping to oil the wheels of trade in Africa.

"We are offering real, tangible help, from technical assistance on transport infrastructure projects to technical assistance with streamlining border post bureaucracy. Together these will enable traders to move goods more quickly.

"Trade is vital to development. Trade drives growth which in turn creates wealth in communities. Through trade we can help people to pull themselves out of poverty.

"AFTi will make trade in Africa faster, easier and cheaper, speeding up access to markets for traders and encouraging entrepreneurs in the region to grow their businesses."

AFTi will work with the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC) and the Economic Community of West African States (ECOWAS) in West Africa.

COMESA, EAC and SADC currently work across 26 African countries and have a range of different trade agreements [regulations]. They currently cover half of the the continent and are planning a single 'Grand Free Trade Area'. With better coordination, this has the potential to boost their current GDP of $875bn, which will pull millions of people out of poverty.

Last week, Development Minister Stephen O'Brien launched Trade Mark East Africa (TMEA). TMEA is DFID's flagship programme in East Africa. It works with the East African Community, national governments and the private sector to boost trade in the region by streamlining red tape and developing essential infrastructure projects.

One example of TMEA's work that is already delivering results is with the Burundi Government which has been struggling to raise funds for public services because of dwindling tax receipts.

TMEA worked with the Office Burundais de Recettes (OBR), who collect tax on behalf of the government, to recruit skilled, competent tax inspectors who have increased the country's tax income by 25 per cent (around £19 million) between 2009 and 2010.

OBR has been charged with doubling domestic tax revenue from 230m to 460m Burundian Francs by 2015. This will give the government more money to build roads, schools and hospitals for ordinary Burundians.

Although Africa's economy is around half the size of the UK's, it is fragmented into 54 different countries. Thirty of these are among the world's poorest and many are small, landlocked, and far from the world’s main markets.

AFTi will provide a central focal point for the regional free trade initiatives to ensure they are working together and to prevent unnecessary duplication and overlap.

AFTi is part of the UK Government's Trade and Investment White Paper, part of which will set out how the UK will support African efforts to join up their economies and increase trade between them and the rest of the world.