Africa needs ‘ongoing review’ of trade regimes, says World Bank report

Out-Law News | 02 Jul 2014 | 3:05 pm | 2 min. read

The overall quality of government policies and institutions that broadly support growth and reduce poverty in African countries remained steady in 2013, according to a new World Bank report.

However, the bank’s ‘Country Policy and Institutional Assessment (CPIA) Africa’ report (84-page / 6.53 MB PDF) said much work remains to be done to “meet the region’s needs for effective public services and transparent and efficient government operations".

An ongoing review of trade regimes is also necessary to “remove discretionary and discriminatory barriers, especially the use of non-tariff barriers ... and a more open and inclusive process of consultation on trade policies and rules and regulations that affect trade and greater transparency”.

In the report, scores are awarded to 39 African countries that are eligible for support from the International Development Association (IDA), which is the bank’s fund for the poorest nations. The report gives details of progress African countries are making on “strengthening the quality of policies and institutions that underpin development”.

The scores are on a scale of 1-6, with six being the highest, are designed to indicate the quality of countries’ policy and institutional frameworks covering economic management, structural policies, policies for social inclusion and equity and public sector management and institutions.

According to the report, the average CPIA score for sub-Saharan Africa “held steady” at 3.2 in 2013, but “beyond the flat regional average, there was considerable divergence in country performance”. For the region's IDA borrowers, scores were in a range of 3.9 to 2.0.

The report said “more pressing challenges for the fragile states in Africa” include developing “clear national trade facilitation strategies, improving performance standards in agencies working at the border, reducing clearance times, increasing transparency by making available information on trade procedures readily available to all traders, and addressing corruption in border management agencies”.

Risk management should also be applied more widely to reduce physical inspection rates, and electronic submission of customs declarations and other documentary requirements should be more widespread, the report said.

According to the report, access to finance remained low across African countries but improved steadily to reach about 25% of the region’s adults in 2013. Countries such as Uganda and Mozambique saw “marked improvements” while others, such as Kenya and Rwanda, “continued their upward trends from previous years which could lead to further improvements in access in the next few years”.

The report said these improvements were a result of reforms in the region such as encouraging “branch-less banking”, including mobile money and agency banking, in addition to extended use of “e-government and enhancements in procurement systems... as well as improvements in credit infrastructure and payments systems reforms”.

The East Africa payments systems infrastructure, introduced earlier this year to facilitate trade within the region, “is an important step forward”, with other sub-regional reforms also under way, the report said. Despite improvements, eight countries accounted for about 85% of total loans in sub-Saharan Africa, “while only a handful have noticeable financial markets beyond lending (insurance, pensions, capital markets), following the bank-centric model prevailing in the region”, the report said.

However, the report said a number of reforms that are being launched or are already under way “are expected to deepen markets in Africa, including beyond lending”.

In June 2014, the International Monetary Fund (IMF) announced the opening of a training institute in Mauritius to help African governments “develop the economic policymaking capacity necessary to sustain the continent’s recent economic gains and cope with emerging challenges”.

The IMF said the Africa Training Institute (ATI) is the first such centre in Africa and the fourth established by the IMF worldwide to provide high-quality training in macroeconomic management to government officials. The IMF’s other major training centres are in Austria, Kuwait, and Singapore.

IMF deputy managing director Min Zhu said: “The opening of the Africa Training Institute comes at a time when countries of sub-Saharan Africa are facing important economic and social challenges. The ATI is well positioned to help African authorities tackle these challenges.”