[Letter] African countries are not getting the basics of reliable trade infrastructure right

Chris Hattingh | 10 Oct, 2022
Growth prospects have deteriorated across the continent, including for SA.

A report by the UN Conference on Trade & Development (Unctad) indicates that millions of African citizens are under threat of being pushed into poverty, and social unrest is being worsened by food insecurity. Growth prospects have deteriorated across the continent, including for SA, and will mean lower quality of life outcomes for many.

Among the biggest driving forces curtailing growth are high international food and fuel prices, financial shocks as a result of stronger-than-anticipated interest rate hikes by central banks in developed economies, and acute risks of food insecurity.

The report also highlights that growth has largely failed to really take off, especially in a country such as SA. GDP growth was recorded at 3.3% in 2011, but since then it has generally hovered around 2%.

The Unctad report finds that Africa’s economic activity is expected to expand by 2.7% in 2022, and only 2.4% in 2023. This means an additional 58-million African citizens will fall into extreme poverty in 2022. This is in addition to the 55-million people pushed into extreme poverty by Covid-19 and government responses to the pandemic.

One avenue to arrest the decline and possibly unlock real growth is trade. However, many countries are not getting the basics of reliable trade infrastructure right. In SA the country’s ports are once more hobbled, and in some places simply not functioning, due to ongoing strike action. The United Transport Union downed tools last week, and Transnet subsequently declared force majeure. At time of writing (the morning of October 10), the SA Transport and Allied Workers Union was set to join the strike.

Two of the remaining strong points of the economy, agriculture and mining, will be deeply damaged by this strike, as well as the continued problems and inefficiencies across railways and at the ports. The effect on exports will be significant, in turn hurting investment, job creation and growth, as well as the fiscus and government revenue.

Letter originally appeared here.

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