Fin24

'Africa needs trade not aid'

2008-05-28 07:20

Johannesburg - Africa's future economic growth should happen through trade and not aid, said President Thabo Mbeki in Japan on Wednesday.

"Without discounting the importance of aid, improved terms of trade for Africa is critical to ensure its full integration into the global economy," said Mbeki at the international conference on African development summit at Yokohama.

He said the continent needed to strengthen productive capacities and competitiveness in order to produce quality exports at competitive prices.

"Market access alone does not always translate in the ability for the developing countries to penetrate markets," said Mbeki.

Access to new technologies at affordable prices and investment in research and development, technology and innovation was as important to ensure economic growth.

Mbeki said tariff peaks and tariff escalation remained major obstacles to African exports and to the diversification of many countries' manufacturing base.

Africa needed "better terms of trade".

The continent also needed to increase its portion of global foreign direct investment, said Mbeki.

Key to unlocking growth

The private sector needed to invest in a way that contributed to the development of the continent's productive capacity and the broadening of its industrial base.

"This would mean investing in a way that not only aims to turn around the marginal share of investment flows that Africa currently attracts, but to ensure that investment is broad-based and long-term," he said.

"Effective partnerships have to be developed between governments and the private sector."

Mbeki said capital outflows from African countries needed to be stopped.

Increased revenues needed to be used to improve the business environment, build infrastructure and increase access to finance for entrepreneurs.

Mbeki said the challenge for economic growth for the continent was to ensure it was broad-based and helped eradicate poverty and inequality.

He said the measures he suggested would "help to unlock growth right down to the bottom of the pyramid - the rural poor".