The World Bank is urging African Nations to foster intra-Africa trade to help caution themselves against trade tensions globally.
In a report, the lender says policies that foster international trade integration can create growth opportunities, but further warns that trade openness if not appropriately managed could expose the countries to lower growth and greater instability and inequality.
‘’Regional trade integration in Sub-Saharan African can enhance connectivity across markets in the region especially the linkages between smaller economies with larger markets. It can also be a risk management mechanism to protect Sub-Saharan African countries from trade tensions outside the region and/or economic downturns in the world’s larger markets.’’ The report says.
Adding that Intraregional trade in Sub-Saharan Africa is highly concentrated with about two-thirds of the regional demand for intraregional exports accounted for by 10 countries only.
The report continues to show that Closer trade linkages between African countries could provide an additional driver of growth and productivity especially because they may enable countries to expand their markets and firms to operate at economies of scale.
”Greater synchronization of economic activity among trading partners will enable fast-growing countries to pull their main trading partners along with them. In an environment where trade tensions have escalated between the United States and its Western allies and China, the region can protect itself through greater intraregional integration.’’ it reads.
The report follows an Africa Continental Free Trade agreement among 44 African countries which is expected to create a single market for goods and services across the continent, bringing benefits for businesses and consumers and strengthening Africa’s position in world trade.