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Monday, July 04, 2005

BBC NEWS | Business | Trade 'vital' to African progress

BBC NEWS | Business | Trade 'vital' to African progress Trade 'vital' to African progress
Paul Wolfowitz has said action is urgently needed on boosting trade and cutting subsidies if Africa is to meet the UN's Millennium Development Goals.

The World Bank director told a conference in London that the achievement of key targets on poverty reduction required action on trade in addition to increased aid and reduced debt.

He pointed out that Africa's share of global trade has dropped from 3.5% in 1970 to around 1.4% in 2005.

"We need more action on trade," he said.

"Trade is absolutely vital to the increased growth that Africa needs to reach the MDGs. So further action in opening markets and reducing subsidies is an essential part of the equation."

Enterprise vital

The issue of trade and subsidies has been placed to the fore ahead of the G8 summit in Gleneagles, following the Live8 concerts.

Both the US and the EU subsidise their agricultural sectors.

Critics argue that subsidies distort prices and African countries are unable to compete as a result.

However, Mr Wolfowitz also stressed that the potential role of the private sector in stimulating trade was "not getting nearly enough attention".

Small enterprise and business "might be the most important component of all," he added.

He said he had been particularly inspired by a young flower seller in the Rwandan capital Kigali, who he met while visiting the continent last month.

The woman had been living in the US, but had returned to her home country and was now doing "brisk business," growing roses and exporting them to Europe.

"She is struggling with inadequate electricity and difficult transportation problems, but these are early days for her and she is building her business," he said.

"When I asked her why she had come back to start this business she told me, 'I came here to grow beautiful flowers on the ashes of genocide.'

"We must do more to help create the right opportunities for inspirational people like that woman," Wolfowitz added.

Not a panacea

Dr Kipkorir Aly Azad Rana, deputy director of the World Trade Organization, told the conference that while agriculture subsidies should be looked at "very critically," simply removing all subsidies would not automatically be the answer.

"There is not an even playing field... you cannot expect that removing subsidies will solve Africa's problems," he stressed.

Should the US scrap cotton subsidies, he said, Africa would not benefit as much as countries like Australia whose crop yields were significantly higher.

"It is not automatically Africa which will benefit - it will be countries like Brazil and Australia," he added.

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