October 1, 2022

Namibia: Regional economic integration to boost trade in timber products

REGIONAL economic integration can stimulate trade in timber products between African countries, other than sending raw timber mainly to China.

This is according to the findings of a new report produced by the African Natural Resources Center of the African Development Bank.

The report, Intra-African Trade in Wood Products – Case studies from Benin, Cameroon, Ghana and the Republic of Congo, published in May this year, explores the role that forest value chains can play in promoting development goals. of Africa.

The continent’s significant forest resources are underutilized, the report notes. In addition, despite the high number of timber exporting countries in Africa, over 90% of exports are of low value-added primary products, rather than furniture, window and door frames, printing paper and printing. writing, newsprint, household toilet paper and packaging materials.

There are many reasons to promote wider intra-African trade in wood products. For developing countries, import substitution is important to advance industrial development but also to eliminate balance of payments problems.

The forest products sector lends itself to import savings because the demand for forest products is very sensitive to price changes.

In addition, many other industries have so-called downstream links with the timber sector, which means that they depend on it for their inputs. In turn, the forest industry also sources inputs from other sectors, which means that the sector can influence industrial development at national and regional levels.

The timber industry can also promote job creation, especially in rural areas where unemployment is often highest.

According to the report, the African Continental Free Trade Area (AfCFTA), which entered into force on January 1, 2021 and created a trade zone with a combined GDP of US $ 3.4 trillion, may be a game-changer for intraregional trade in goods. wood products. .

The agreement is expected to reduce tariffs among member countries and cover policy areas such as trade facilitation and services, as well as regulatory measures such as sanitary standards and technical barriers to trade.

Overall, intra-African trade is much lower than trade within other regions, at 10-13%. By way of comparison, intra-regional trade represents 72% in Europe and 52% in Asia.

The report identifies six factors that will be critical in boosting intra-African timber trade: continental destination of products, African destination of products, type of product, private sector commercial interest, demand for tree species, and government policy and regulation. .

In addition, the disparate endowments and resources of African countries can also stimulate demand and open up greater trade opportunities on the continent.

The report also recommends the harmonization of regulations governing cross-border tariffs and the promotion of domestic consumption of finished wood products by guaranteeing quotas in public procurement and providing value-added incentives.

“Countries need to develop concrete strategies to ensure further wood processing, stimulate local consumption and leverage the AfCFTA to boost trade in wood products,” said Julius Tieguhong, forestry officer at ANRC.

The full report is available on the AfDB website.