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Interview: Internal trade in Africa records impressive growth: former Nigeria bank official

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The internal trade in Africa has recorded an impressive growth in recent years and currently experiencing rapid development, according to a former top official of Nigeria's apex bank.

Internal trade in Africa is historically and generally quite low but has, recently, started growing impressively, Obadiah Mailafia, former Deputy Governor of the Central Bank of Nigeria (CBN) on Economic Policy, told Xinhua in an interview.

He said the volume of intra-West African trade alone has grown impressively from 5 percent, which it recorded some 30 years ago, to about 14 to 15 percent now, which indicates a rapid and impressive growth.

Mailafia, who is an expert in economics, noted that on the average, the volume of internal trade in Africa is about 10 percent and is growing very fast. "In fact, this is a rapid growth in internal trade we are seeing among regions and the continent as a whole. For the first time, we are seeing trade booming between East and West Africa, between West Africa and Southern Africa and so on," he said.

According to him, however, there is a caveat to the rapid development of internal trade in Africa, considering the low interest that has been shown in the "invisible trade" on the continent.

For instance, a lot of Nigerian women transport goods to Abidjan or Accra and vice-versa, but a lot of the trades were not usually registered officially. "So, if we are to include this informal trade, the volume of trade in Africa would have been quite higher than what we are recording now," he explained. He added that despite the impressive development, the continent still records a low volume of trade compared to what is being recorded in Europe, where the volume of trade currently stands at about 70 percent.

Statistics showed that the volume of trade in Europe is extremely on the high side because the original integration process has worked tremendously well on that continent, he noted.

Mailafia, who currently works as the Chief of Cabinet at the African, Carribean and Pacific Group, said one of the constraints of the intra-Africa trade has to do with the nature of goods that are produced on the continent. "If you produce cotton and I produce cotton, or if you produce oil and I also produce oil, or you produce cocoa and I produce cocoa, there is no much trade that can take place between us because we all will be struggling to sell to third parties. So, that has been a major constraint on African trade," he said.

Another constraint has to do with the lack of institutional linkages, which include proper infrastructures, he said. Many African countries still face major infrastructural constraints -- such as railways, airports, harbors, electricity and so on -- which slow down the pace of development on the continent, he further noted.

"The banking systems as well as the exchange rates are different and so on. And, of course, at the borders (between Nigeria and Ghana, for instance) there are several types of bottlenecks that you face there," he added.

He said even though there were agreements between west African countries, they are faced with a lot of challenges while transporting goods across the borders.

Despite some of these challenges, Mailafia believed that Africa's economic prospects are quite good, noting it is the second fastest growing region in the world with an average growth rate of nearly 7 percent in the last five years.

"A few countries have even reached 10 percent and more, talking about Ghana, Equitorial Guinea, Rwanda and Ethiopia. That of Nigeria would have even be more than 10 percent, if we have not had security challenges such as Boko Haram, militancy in the Niger Delta and so on -- including infrastructure bottlenecks such as electricity," he said.

"If we could overcome those challenges alone, growth in west Africa, particularly in Nigeria, will reach more than 15 percent. So, I think the growth prospect for Africa is very, very good," he said.

He lamented that security challenges, occasioned by religious conflicts and ethnic violence as well as various shades of terrorism and constitutional crises taking place in African countries, have made local and international investors to be more conscious than they naturally would have been.

The former Nigerian apex bank chief opined that there is now a boost in the aggregate demand for commodities, following the rise of Brazil, Russia, India, China and South Africa - altogether known as BRICS group - due to their rapid growth .

Since many of the strategic raw materials - more than 50 percent of them, as estimated - are found or produced in Africa, the continued rise in demand for African commodities will ensure that in the foreseeable future the prices of those raw materials will continue to be very strong, he enthused.

"If harnessed carefully, these resources will ensure growth and long term prosperity for the people of the continent of Africa," he added. Endi