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Cape Town - Africa and Asia need to increase trade to ensure the realisation of their respective economic development agendas, Deputy President Cyril Ramaphosa told delegates at the Asia-Africa Business Summit in Jakarta, Indonesia on Tuesday.
The summit occurs ahead of a Tripartite Free Trade Agreement, which will add impetus to Asia's involvement in Africa.
“It will establish an integrated market with a combined population of 600 million people, a total GDP of $1trn, and a long-term growth rate in excess of 5% per annum,” said Ramaphosa.
The summit also occurs 60 years after the Bandung Conference, which resolved to “condemn colonialism in all of its manifestations” and promote Afro-Asian economic and cultural ties.
Gap in Asia/Africa trade relations
“Trade flows between the two continents have increased significantly over the years, totalling $423bn in 2013,” said Ramaphosa. “However, as of 2014, Asia accounted for only 26% of Africa's trade flows.”
All of the top 10 Asian imports from Africa are commodity-based, with crude oil and gas accounting for 58% of imports and ores and metals accounting for a further 20%.
Africa's imports from Asia are more diverse, comprising machinery, vehicles and electronics, which account for 30% of imports.
Reforms needed
Ramaphosa said reforms are needed to place Africa-Asia trade on a higher growth trajectory.
“The first can be described as 'at the border' reforms. These are aimed at eliminating escalating tariffs on Africa's leading exports.
“The second are 'behind the border' reforms, in which Africa takes steps to improve competitiveness and strengthen its basic market institutions.
“The third - 'between the border' reforms - are aimed at improving trade facilitation infrastructure and institutions to reduce transaction costs associated with customs administration, transport and communications.”
Focus on agriculture
Ramaphosa said Asia and Africa could collaborate in a number of areas, such as agriculture.
“Because of the diversity of crops cultivated on the continent, Africa has the potential to increase the nutritional value of global food supply more than any other region in the world.
“However, for African farmers to benefit fully from their contribution to global food supply, they need to be more involved in the food value chain - from seed to market.”
Manufacturing collaboration
Another area for greater collaboration is manufacturing.
“Manufacturing is vitally important to Africa's economic future as it can contribute substantially to improving growth, reducing unemployment and addressing balance of payment issues.
“With a market of close to 900 million people, Africa has the capacity to become a manufacturing success."
Infrastructure concerns
Africa's ability to trade is hampered by a lack of physical infrastructure, he said.
“Many African countries - without adequate rail, road and port infrastructure - are unable to productively exploit their abundant natural resources.
“Asian countries - with their skills, capital and technical and engineering expertise - can partner with African countries in developing this critical area.
“Infrastructure development is crucial to the success of the Tripartite Free Trade Agreement, both to connect markets and to generate enough electricity to support the development of manufacturing and other sectors.
“By strengthening South-South cooperation, we can begin a new era in global trade - one that will be driven and sustained by two of the world's fastest-growing regions,” said Ramaphosa.
Deputy President Ramaphosa addressing the Asian African Business Summit 2015 held at the Jakarta #SAIndonesia pic.twitter.com/bO0iunhSIu
— GCIS Media Liaison (@GCISMedia) April 21, 2015#SAIndonesia pic.twitter.com/KpCbAMj32f
— GCIS Media Liaison (@GCISMedia) April 21, 2015The Bandung Conference which was held in 1955 laid a firm foundation for the Asia-Africa solidarity against colonialism and apartheid
— GCIS Media Liaison (@GCISMedia) April 20, 2015
