Supply capacity hampers Africa's export performance

African export performance is being hampered by a lack of “supply capacity,” according to the 2008 Economic Development in Africa report by Unctad. The report says “liberalised trade rules have opened up opportunities, but African nations lack the building blocks needed to supply, efficiently and in quantity, what the world wants”. The manufacturing sector, where potentially higher profits and higher living standards can be realised, has been stagnating while other developing regions have greatly expanded their industrial outputs. Shortages of reliable electricity supply, research and development skills, flexible investment and banking services, and efficient transportation have limited export growth. Africa should strive to follow the formula of a number of Asian economies – diversify and boost manufacturing through technology upgrading, research and development, education, and training, says the report. These weaknesses explain why the continent has lost market share from 6% of world exports in 1980 to about 3% in 2007, says the report. The importance of manufactured exports for economic development has been illustrated by the experience of the East and South East Asia region where manufacturing products account for about 90% of total merchandise exports. In Sub-Saharan Africa, exports from the manufacturing sector account for only 26% of total exports, the lowest proportion of all regions. According to the report, over the period 2000-2006, only eight African countries had manufactured exports worth more than 10% of their GDPs or more: Botswana, Mauritius, Morocco, Namibia, South Africa, Swaziland, Togo and Tunisia, according to the report. Governments on the continent need to reverse several “worrisome trends”, according to the study. These include neglect of agriculture that has hindered African countries at a time of climbing commodity prices.