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These measures constitute the first steps towards rendering the financial systems more responsive to mobilizing resources. Other measures that are being taken include improving banking infrastructures, developing non-bank financial instruments and supporting micro-finance. However, given the low income levels, there is a limit to which domestic resource mobilization can generate sufficient resources to finance investments needed for sustained growth. Domestic resource mobilization would, therefore, need to be complemented by external resources, both private and official. IMPROVING TRADE PERFORMANCE Investment and trade are positively associated and mutually reinforcing. Trade matters a great deal because export performance is an important factor determining the limit to which investments can be expanded and growth and poverty reduction accelerated without encountering balance of payments problems. Notwithstanding this importance, Africa has not been able to take advantage of the enormous increase in world trade during the last two decades. In each of the past two decades, Africa's average export growth, at 6 per cent, was less than half that of other developing countries as a whole. As a consequence, over the same period Africa's share in world trade declined from about 5 per cent to 2 per cent.
The deterioration in Africa's trade share is partly a reflection of the difficulties in increasing, or even |
maintaining, its market in primary commodities in which it enjoys considerable advantage. The markets for such knowledge-based products are promising because their demand increases more than proportionately with the growth of global income. The Post-Uruguay world, which is configured by as many as 18 separate agreements embodied in the Final Act of Marrakech 1994, presents challenges and opportunities for African countries. These agreements, scheduled to be fully implemented by the year 2005 will affect African countries in three main areas. First, as a result of the relaxation of agriculture subsidies, particularly in developed countries, Africa might experience an increase in its food-import bill, which accounts at present for about a quarter of merchandise imports. Second, the Agreements' tariff-cutting measures would tend to erode Africa's preferences under the Lomé Convention and other preferential arrangements. Third, the liberalization of trade in textiles will also expose Africa's textiles and clothing industries to competition from Asia's low-cost producers. On the positive side, the full implementation of the terms of the Agreements has the potential of accelerating the growth of trade, offering developing countries opportunities to expand exports in general, and labour-intensive manufactured products in particular. Yet for these benefits to be significant, measures such as the "special and differential treatment" offered by the World Trade Organization to developing countries would need to be implemented with good effect. This treatment aims at providing developing countries more favourable access to the markets of developed countries. The collaboration of these countries in reducing their non-tariff barriers and allowing a freer access to their markets especially in the case of agricultural products is necessary. THE ROLE OF THE BANK GROUP At the end of 1998, the Bank Group had approved over 2,200 loans and grants for a total cumulative amount of over US $ 34 billion, of which nearly two-thirds was financed on non-concessional terms and the rest on concessional terms.
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