Overview -Trade and Development in Africa
Overall, economic performance in sub-Saharan Africa has improved steadily over the last five years as better macroeconomic and structural policies have begun to bear fruit. Africa's economic performance is expected to continue improving because greater efforts are being made to strengthen the policies that are crucial for boosting economic growth. Two major drivers of development are trade and investment.
Expanding Africa's trade with the rest of the world
Throughout Africa an increasing number of countries are opening up to the opportunities of global trade. There is today a decisive effort to allow foreign trade to play a lead role in the growth process.
Since the beginning of the 1990s, most African countries have made significant progress in liberalising their exchange and trade regimes, often in the context of IMF-supported programs or regional arrangements. They have substantially lowered quantitative restrictions on trade, reduced maximum tariffs and the dispersion of tariff rates, and lifted restrictions on payments and transfers for current international transactions. Given the improvement in growth performance that has accompanied the opening of their trade regimes, many African countries are seeking to press ahead with further tariff reductions. Firm timetables for tariff reform are being established to bring African tariff regimes in line with best practices in other developing regions. Tariff reductions are also being accompanied by the elimination of exemptions, the broadening of the tax base, and measures to develop alternative sources of revenue and to improve administrative efficiency, so as to minimise net revenue losses.
Many African countries are trying to enhance the credibility of their reform efforts by incorporating them into regional or multilateral arrangements. There are several examples of this in Africa, including the West African Economic and Monetary Union (WAEMU), the Central African Economic and Monetary Community (CAEMAC), of the East African Community, and of the Common Market of Eastern and Southern African States (COMESA).
Critical supporting policies are also being put in place, including, the maintenance of appropriate exchange and interest rate policies, and equitable taxation systems. In addition, structural measures are being implemented to reduce the relatively high transaction costs weighing on African producers, through investment in the physical infrastructure, rationalising the frameworks for transportation and communication networks; and simplifying bureaucratic procedures.