The newHorn of Africa Initiative would speed up the implementation of the African Continental Free Trade Area (AfCTA) Agreement and enable the countries to export products at lowest cost thereby increasing competitiveness in global market, an economist Dr. GutuTesso says.
Recently, Ethiopia’s Finance Minister Ahmed Shide stated that finance ministers of the five Horn of African countries are endorseda new initiative that aims to speed up the realization of the continental free trade area. The Initiative believed to improve the transport, trade, agriculture, and health condition in the region,and it is tabled for the leaders for final approval.
Approached by the Ethiopian Herald, the economist states that the increase in the volume of Ethiopia’s import- export activities with Horn of Africa countries enhance trade balance and ensure mutual benefits. “Sharing borders with all of the Horn of African countries, Ethiopia would also become the most beneficiary party from the AfCTA.”
Noting that the establishment of African- wide trade market is the best way in enabling Africans to utilize resources by own capacity, the expert indicates that the continental trade block wouldalso enhance trade transactions. The creation of strong and better market in the Horn would in turn boost the competition among the reaming regional economic blocs.
“AfCFTA is helpful in connecting the continent by infrastructure, technology and the likes and this would further enhance the development of strong connection among the continent,” he said, adding that the common markets paves the way for the easy flow of goods in the continent and export products to the rest of the world.
African needs toinvest in the expansion of infrastructure expand so that attract more foreign direct investment and narrows financial gap. Increasing domestic resource mobilization is something worth equal consideration to achieve continental vision of brining structural transformation.
On the other hand, the initiative would have a role in improvingin frastructural connectivity, trade, agriculture, and health conditions in the Horn of Africa and thereby supplementing the pace of the region’s economic growth. The compatibility of resources in the Horn of Africa necessitate the countries to merge their products and exports to North American and European markets in a view to acquiring more profit.
According to Dr. Gutu, the unsatisfactory regional trade is attributed to the fact that most of the Horn of African countries are heavily rely on the export of few and similar agricultural commodities and lack of diversification. For instance, coffee is the major export item for Ethiopia, Kenya and Uganda.
The competition is not limited to the export market but also to imports of consumer items, capital goods, technology, and knowledge intensive products from the international market. The minimal internal value creation capacity is very much influenced by the low level of infrastructure and infrastructure connectivity, low technological development, little or no access to capital and weak governance, including a weak regulatory environment.
The lack of interdependency could be viewed as a cause, and also a consequence of the grave problems in the Horn of Africa. The weak interdependency could be manifested in terms of trade, infrastructure connectivity and weaknesses in the delivery of state services at their connecting points, the expert remarks.
In summary, the region has a great potential for growth and development and the existing cross-border cooperation agreements are only limited to cross-border trade and security issues. Horn countries should give utmost priority to enhance the existinginadequate infrastructural connectivity and ensure sustainable peace so that creating long-standing peace and stability in the region.
Besides its role in fostering economic integration, the Horn Initiative plays vital role for peace building in the region and the continent at large. “Previously the only objective of the horn countries was the quest for peace and it was the longstanding objective of national governments and development partners in the Horn of Africa,” Dr. Gutu says, adding that now the countries turn their face towards economic integration and to create common market at regional and continental levels.
The expert explains that, countries with integrated and interdependent economies are less likely to get into conflict and with more integration and interdependence, the costs to maintain peaceful relationships decreases and more space is created for peaceful resolution of disputes and conflicts. As a result, trust and understanding of each other’s interests and priorities would develop in the process of integration and peaceful co-existence in the Horn of Africa.
The Ethiopian Herald, June 29/2019
BY HAILE DEMEKE
Photo:- File
