Trade Capacity Building in Sub-Saharan
Africa: Impact and Challenges
Patrick Osakwe
UN Economic Commission for Africa
I. Background
The Millennium Declaration specifies targets for
poverty reduction in poor countries
If current trends persist, several countries in Sub-
Saharan Africa are unlikely to meet the specified
targets
Research studies suggest that the region would
need additional resources equivalent to 20 percent
of GDP if it is to achieve the MDGs
The required resources can come from one of
three sources:
Increase in domestic savings
More FDI inflows
Increase in international trade
Given the difficulties associated with raising
domestic savings and attracting FDI to Africa,
more emphasis is being placed on trade as a
possible solution
But Africa has not been able to integrate itself
fully into the global trading system due in part to
trade capacity constraints
II. Objectives of Paper
Identify the capacity constraints facing Africa in the
trading system
Assess likely impact of current trade capacity building
programmes
Suggest ways in which trade capacity building could be
improved to ensure that trade is used as an effective
vehicle for poverty reduction in Africa
Figure 1: Types of Trade Capacity
Constraints
Capacity to Fulfil Capacity to Influ-
Commitments to the ence the Agenda and
Trading System Pace of Negotiations
Capacity to
Negotiate Effectively
Capacity to Exploit Capacity to deal
Trading Opportunities with External
Shocks
Capacity to Formulate
Effective Trade Policies
III. Main Capacity Building Programmes
Joint Integrated Technical Assistance Programme
(JITAP)
Designed primarily to provide assistance to African countries
Launched in 1996 but became operational in 1998
Integrated Framework (IF)
Designed to respond to capacity building problems of LDCs
Inaugurated in 1997 with the objective of mainstreaming trade
into development strategies
Figure 2: Regional Distribution of Expenditure on Trade
Capacity Building (millions of US$)
2500
2000
1500 2001
1000 2002
500
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Figure 3: Main Beneficiaries of Trade Capacity Building in
Africa (%)
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IV. Impact of Trade Capacity Building
Programmes
It is difficult to conduct an assessment of the
impact of donor-funded trade capacity building
programmes in recipient countries
Outcomes of programmes are observable only in the
medium-to-long run
Donor support is not the only factor that affects trade
capacity development. Domestic policies are also
important
Until recently aggregate data on trade capacity building
was either not available or accessible
Methodology
There are at least three ways to conduct an assessment of
the impact of trade capacity building in recipient
countries
Before-and-after programme approach
Regression analysis. If outcomes are known this can tell us
whether they are explained by trade capacity building
Correlation analysis. When outcomes are unknown, this can
tell us whether or not trade capacity building is associated with
factors that affect long-term capacity development. Data
limitation restricts us to this approach.
Question
The key question in this paper is “What is
the likely impact of current trade capacity
building efforts on long-term capacity
development in Africa?”
Note that complementary domestic policies
(an enabling environment) are required for
trade capacity building to have positive long
term impact in Africa
Given this fact, our test relies on cross-country
correlations between expenditures on trade
capacity building and economic and social
variables capturing whether or not there is an
enabling policy environment
Degree of political instability
Extent of governance
Incidence of HIV/AIDS
Education
Exports and Export Diversification
Table 1: Cross-country Correlations of Trade
Capacity Building with Selected Variables in Sub-
Saharan Africa (2001-2002)
Parametric test Non parametric test
Variables Pearson Spearman rank Kendall rank
Correlation Correlation Correlation
Regulatory 0.22 0.27 0.19
Governance quality (0.14) (0.06) (0.07)
indicators
Government 0.21 0.29 0.19
effectiveness (0.15) (0.05) (0.07)
Political instability 0.19 0.43 0.31
(0.40) (0.05) (0.05)
HIV/AIDS 0.51 0.36 0.24
(0.00) (0.03) (0.04)
Education 0.08 0.00 0.00
(0.58) (0.95) (0.97)
Export volumes 0.42 0.28 0.19
(0.00) (0.06) (0.06)
Export diversification -0.50 -0.38 -0.27
(0.02) (0.09) (0.09)
Key Policy Implication of Results
If current trends persist, trade capacity building
programmes are unlikely to have any sustained
positive impact on capacity development in Africa
due to Political Instability and the HIV/AIDS
epidemic.
Political instability encourages Brain Drain
HIV/AIDS destroy precious human capital
Table 2: Estimated and Projected Loss of Labour Force due
to HIV/AIDS
Country 2000 2020
Namibia 3.0 26.0
Botswana 6.6 23.2
Zimbabwe 9.6 22.7
Mozambique 2.3 20.0
South Africa 3.9 19.9
Kenya 3.9 16.8
Malawi 5.8 13.8
Uganda 12.8 13.7
Tanzania 5.8 12.7
Central African Republic 6.3 12.6
Cote d’Ivoire 5.6 11.4
Cameroon 2.9 10.7
V. How can trade capacity building be made
more effective?
African governments must create an enabling policy environment
for individuals to take the initiative to develop their human
capacity
Institutional capacity development should be given priority
Need to change the attitude of policymakers towards research and
policy analysis
Private sector must be more involved in trade capacity building
and policy formulation
Need to address the risks posed by political instability and the
HIV/AIDS epidemic
Trade capacity building cannot be done in isolation. A
comprehensive approach is needed.
Challenges for African Governments
The degree of attention to devote to trade and trade
capacity building relative to other development problems
How to reduce risks of policy reversals to ensure
sustainability of capacity building programmes
Ensuring that all local stakeholders participate actively in
the process
Enhancing coordination and timely exchange of
information among government departments to ensure
policy coherence
Challenges for Donors
Increasing donor coordination of programmes
Reducing the incidence and risk of biased aid
Ensuring local ownership of programmes and
outcomes
Generating sufficient funds domestically to
support capacity building in recipient countries
Challenges for Executing Agencies
Coordinating capacity building programmes
to enhance the effectiveness of assistance
Resisting the temptation to focus on outputs
rather than outcomes
Ensuring that programmes are sustainable
and create and incentive for recipient
countries to develop the ability to help
themselves