By: Sophie Justice, International Trade Centre
A private sector forum held in conjunction with the African Union (AU) Summit in Kampala, Uganda in August 2010 concluded that a greater private sector presence was needed in African trade integration talks…
The meeting was convened to address new business opportunities in the aftermath of the economic crisis and was organized by the Commission of the African Union in collaboration with the International Trade Centre (ITC), the United Nations Global Compact, the African Export-Import Bank, the Government of Uganda and the Ugandan private sector. In today’s environment of economic recovery, greater inclusion of the African private sector is vital to economic development. ITC Executive Director Patricia R. Francis said that, with only five years to go to meet the Millennium Development Goal targets, “It will take coordinated multilateral action to address the triple bottom line of people, planet and prosperity if we are to achieve these goals, and the private sector is a partner in this drive.”
Africa’s economy has been severely impacted by the financial and economic crisis. A game changer is required to increase the competitiveness of its industries and its share of global trade. Addressing the forum, Ms Francis said, “The big issue is about getting the private sector in Africa up to a level where it can compete globally.” The ITC Executive Director also told the meeting that Africa should be looking for investments that add greater value to their products even as commodities.
By way of a first step, a closer dialogue is needed between the public and private sectors to improve the trading environment. ITC is urging that a mechanism be set up to enable these closer relationships. According to Ms Francis, “The private sector has the energy and imagination to take on the international marketplace, but it needs support from governments and international agencies through programs such as Aid for Trade.”
Aid for Trade is a World Trade Organization (WTO) program in developing countries. ITC participates in this initiative to support small and medium-sized enterprises (SMEs) to become more competitive and to integrate business activity with policy.
Forum participants concluded that SMEs are already key drivers of economic growth. In fact, trade revenues and private investment dwarf government aid. However, further support is required and two items were singled out for particular consideration:
- The need for new trade finance support mechanisms by regional development banks for SMEs, in particular, the access to long-term credit and guarantee lines from local commercial banks.
- The establishment of supply chains connecting Africa to global markets and improved business development services to exporting SMEs.
Recommendations from the forum were presented to the heads of state and government leaders at the AU Summit Round Table by a delegation led by Ms Francis. The recommendations included recognition that trade (including Aid for Trade) lies at the heart of Africa’s development. Furthermore, meaningful partnerships need to be forged at national, regional and continental levels to take advantage of market opportunities, including:
- Engaging in public–private dialogue as governments and the business community work to improve competitiveness in a changing global environment.
- Setting the agenda on the importance of an institutionalized mechanism in order to be credible business partners in global markets.
The ITC, through its partnership with the African Union, has taken the leadership in engaging with the private sector on issues of importance to the African continent, in particular through the WTO’s Aid for Trade Initiative established in 2005.
For more information, please contact Katie Hall, International Trade Centre.