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WEDF 2014 session report: Benefiting from South-South trade opportunities

  • Speakers

    • Hon. Alma Omarou, Minister of Trade and Private Sector Development, Niger
    • H.E. Mr. Yu Jianhua, Ambassador and Permanent Representative to the WTO, China
    • H.E. Mr. John Mwangemi, High Commissioner in Rwanda, Kenya
    • Mr. Debasish Mallick, Deputy Managing Director, Export-Import Bank of India
    • Ms. Mulu Solomon, Honorary President, Ethiopian Chamber of Commerce and Sector Associations
    • Mr. Ratnakar Adhikari, Executive Director, Enhanced Integrated Framework
    • Moderator: Mr. Lanre Akinola, Editor, This is Africa

    Overview

    South-South trade accounted for a quarter of world trade in 2013, its highest level ever. To maintain growth trends, developing and least developed countries need to focus on growth markets in emerging economies. Most of this trade today is taking place within Asia and Latin America.

    Panellists explored how African countries can better capitalize on this trend and attract more investment in non-primary sectors, including agro-processing, manufacturing and services. They discussed how SMEs can benefit as suppliers in emerging South-South value chains, and how countries in Africa can retain more value-added as they join global production networks.

    Conclusions

    • Emerging economies that shape South-South trade represent promising markets for sub-Saharan exporters and may be sources of foreign direct investment. This can lead to the emergence of a dynamic private sector and new entrepreneurship. The challenge for host governments is to ensure that investment occurs in sectors that create jobs and add local value.
    • SMEs can benefit as suppliers in emerging South-South value chains. This can lead to export and product diversification, as well as product specialization.
    • Given the right investment incentives, sub-Saharan Africa can retain more value-add as local companies join global production networks and SMEs move up value chains.

    Speakers' key messages

    • Minister Omarou
      Niger has numerous challenges. The biggest is the cost of production. Niger imports electricity from Nigeria. It takes four weeks for a truck to reach the port in Cotonou. Transport logistics are poor. The country needs to diversify away from oil and uranium.
      The country needs regional solutions to be competitive. For example, Congo and Nigeria could produce and share energy within the region.
      Chinese and Indian investors are making the same errors as investors from the developed world made earlier: there is not enough knowledge transfer and equitable cooperation.
    • Ambassador Yu 
      Since 2009, Africa has been an increasingly important trading partner for China, with exports exceeding US$ 100 billion.
      “Direct investment increased from US$ 1.4 billion to US$ 3.5 billion from China to Africa in the last four years. We require Chinese investors to obey laws of recipient countries and contribute to the local socio-economic development. This process is incremental, and cannot be done overnight. This win-win cooperation will be good for development in the South.”
    • Ms. Solomon 
      The Ethiopian Chamber of Commerce provides significant support to the private sector, but has to adapt to changing times. Countries in the South need to cooperate more in order to grow. While electricity is the cheapest in the world, the business climate overall needs to improve, along with public-private dialogue.
      “Made in Africa and Made in Ethiopia can be exported anywhere.”
      “We are working to make “informals” formal to bring women entrepreneurs to export markets.”
    • Mr. Mallick
      Most investment from India has been to Ethiopia, perhaps thanks to successful marketing. Other countries are starting to elicit interest. “If you go by sheer numbers and dynamic forces that the global economy is unleashing in South-South cooperation, there is clearly opportunity everywhere in Africa.”
      “It’s not a question of exporting manganese one day and another material another, or targeting Brazil one day and India the next. You have to look at sustainable ways of doing things yourself within Africa.”
      “What India can give is to share its development knowledge so that Africa can develop its buoyancy.”
    • Ambassador Mwangemi
      “We are removing trade barriers, addressing infrastructure, developing trade policies, to ensure that the business environment between countries is conducive for our people.”
    • Mr. Adkhikari
      “Aid for Trade is important in the context of South-South trade. They cannot take advantage of market access opportunities because of supply side constraints. By providing resources and technical advice, it can make a difference.”
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