Africa: Effect of Transportation In Regional integration and Trade Development

 

Africa, the world’s second largest and second most populous continent in the world, with a land area of 30.4 mn sq km, is a market of 1.2 billion people and an estimated GDP of US$ 2 trillion in 2017.

According to the African Economic Outlook 2018, real GDP in Africa is estimated to have increased to 3.6 percent in 2017, from 2.2 percent in 2016, reflecting sound macroeconomic policies, and progress in structural reforms. Africa also has the advantage of a young and growing population and is projected to have the fastest urbanization rate in the world.

Africa also has a huge potential to develop a strong manufacturing sector, which could play a significant role in the economic development of the continent, which include creating employment opportunities, catering to domestic demand, and generating exports surplus, among others.

However, Africa is yet to climb the value chain of mineral processing and manufacturing, which would help the region to unlock its full potential of natural resources. One of the major factors that restrict Africa from reaching the global value chain is the huge deficit in infrastructure sector.

Growth, Trade and Infrastructure in Africa According to the Office of the Special Advisor on Africa, the United Nations, approximately 60 percent of the continent’s population lacks access to modern infrastructure, which isolates communities, prevents access to health care, education and jobs, and impedes economic growth.

Inadequate infrastructure is a major deterrent for Africa to achieve its full growth potential. Hence, meeting the demand for key infrastructure, both physical and social is a priority area for the countries in the region.

According to research, regional integration is very important for a region like Africa, which comprises a number of land-locked and small sized economies. An efficient transport and logistics system could connect these economies and bring them at similar levels by opening up remote areas and improved accessibility to each other’s markets.

This will link Africa’s productive capacity into regional and global value chains by building economies of scale and better utilization of local specialization, resulting in increased competitive capacity in the global market. It could hence accelerate and intensify trade in Africa.

Similarly, a poor transport system is similar to the existence of a non-tariff trade barrier in an economy. It has been understood that the current levels of impressive growth witnessed in the region would not trickle down to the citizens in the form of socio-economic developments without efficient road and rail networks.

The aforementioned topic is brought to you, courtesy of National Mail.

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