Opinion
Africa needs Trade not Aid
By Paul Frimpong
DEAD AID: Why TRADE facilitation is necessary but not AID
Indeed to realize the potential of Africa, there is the need to develop means to facilitate trade across borders and this means major investments in transport infrastructure including roads, ports, internal container depots, inland water ways and railways.
In the post-independence period, trade has being a core element of the development strategy of African countries and despite claiming regional trade as a strategic objective, African countries have yet to reach their trade potential particularly, when it comes to trading with each other.
The importance that African countries attach to regional trade has been reflected in the high number of trade schemes and policies on the continent and this trade agenda is geared towards empowering Africa to take its rightful position in the global economy.
Continental Free Trade
Free trade is a policy by which a government does not discriminate against imports or interferes with exports by applying tariffs to imports or subsidies to exports or quotas. According to the law of comparative advantage, the policy permits trading partners’ mutual gains from trade of goods and services. It is also a means of enjoying goods and services that one has a disadvantage in producing due to the level of discrepancies in resources endowments of the various countries. That is, through trade one country can have access to goods and services produced in other countries. Free trade is also a system in which goods, capital, and labor flow freely between nations, without barriers which could hinder the trade process.
According to the United Nations Economic Commission for Africa (ECA), only 10 percent of trade in Africa occurs between African countries but stands at 60 percent with the rest of the world.
