* U.N. recommends measures to boost private sector
* Says regional trade accounts for just 11 pct of total
* Africa not capturing demand from emerging middle class
By Emma Farge
GENEVA, July 11 African governments should give
more support to entrepreneurs to help boost regional trade
flows, to allow businesses to benefit from growing consumer
demand and insulate the continent from global financial crises,
a U.N. study said on Thursday.
In a break with past recommendations on African trade, the
United Nations Conference on Trade and Development (UNCTAD) said
boosting regional trade would require solutions that do more
than simply remove trade barriers.
While trade with the rest of the world has grown quickly,
inter-Africa trade - at $130.1 billion in 2011, up from $60
billion in the 1990s - has halved to represent just 11 percent
of the total.
By comparison, half of Asia's trade is with its neighbours
while intra-European trade accounts for 70 percent of the total.
The UNCTAD study showed that Africa's oil-exporting
countries such as Libya, Angola and the Republic of Congo were
especially dependent on trade with non-African markets,
exporting less than 5 percent of their merchandise to the rest
of the continent.
But the group said expanding regional trade would help
cushion the continent from outside risks and foster growth.
A World Bank report showed that consumer spending accounted
for more than 60 percent of Sub-Saharan Africa's buoyant
economic growth. This is helping to account for high growth
rates estimated at between 5-6 percent for Sub-Saharan Africa.
"The report recommends to try to build capacity through
entrepreneurship development. There needs to be a mechanism
between the state and the private sector," UNCTAD secretary
general Supachai Panitchpakdi told reporters.
This could help address the problem of the so-called
"missing middle" whereby African companies rarely graduate from
small businesses to mid-size or large firms.
Thin regional trade also makes Africa vulnerable to external
financial crises and overly reliant on expensive imports of
items such as food even though UNCTAD data show it is has 27
percent of the world's arable land.
High custom fees and transport restrictions mean that it is
often cheaper for African countries to import raw materials such
as cotton from Asia, even though many are available from
The UNCTAD report said governments should help improve
access to finance, for example by establishing credit bureaux.
"We see an incredibly high cost of trading," said Frank
Matsaert, chief executive of Trade Mark East Africa, a
not-for-profit organisation helping to coordinate regional
"The key question is how to address those really big, high
cost bottlenecks. Let's face it, consumers pay for those
One factor hampering integration is a proliferation of
regional bodies with overlapping memberships.
Africa has eight regional economic communities recognised by
the African Union, UNCTAD said. Most countries are members of
several, with a mere three African governments restricting
themselves to joining only one.
"My impression is that Africa wanted to buy the carpets
before building the mosque," said Hakim Benn Hammouda, special
adviser to the president of the African Development Bank, at a
discussion on African trade in Geneva this week.
"We built the most complicated institutions and in the end,
we haven't got integration."
(Editing by Alison Williams)