Have you thought of the advantages of Africa importing goods and services? Undoubtedly, this is a question open to lots of debates across the globe. However, since time immemorial African countries have strived to increase profit margins from what they produce. As a matter of fact, today we live in tumultuous times. Change has become more rapid than it has ever been in the history of mankind. The African continent is typically full of many emerging economies that are struggling to keep at per with developed economies around the world. As such, to seek this stability African economies are constantly undertaking ambitious efforts that will shape the future and respond to the needs of their people.
Indeed, as Harold Macmillan once said, a wind of change is blowing across Africa and when the time for change comes nothing will stand in its way of prosperity. Today African countries have grown in leaps and bounds. They have diversified and developed their economies to match some of the most vibrant ones in the world. Throughout the decades of building, growing and reforming; Africa has developed many allies and business partners across the world. Through many imports and exports in and out of Africa these collaborations have only just but deepened. As such, even as the winds of change continue to sweep across the world, Africa continues to reap big from the benefits accrued from importation of goods and services into their continent.
May it be horticulture, machinery or other goods and services, African countries have interacted with other countries in trade in order to increase living standards and as well as provide employment to individuals in different levels of life.
To start off, let’s start by briefly highlighting some of the various advantages of importing goods and services in Africa which generally linger from:
– Increased profit margins
– Lower prices for better value products– imports create new products, which in turn produces healthy competition on the African market and lower prices for consumers
– More choice, better quality
– Government support for developing trade relations and other infrastructures.
– Reduction of manufacturing costs.
– Promotes the growth of economy as well as expansion.
SO, WHAT ARE THE BENEFITS and EFFECTS OF IMPORTING?
What comes to your mind when we talk about benefits or disadvantages of importing goods and services to Africa?
Well, to start off, importing basically involves buying goods or services from another country .There are various benefits of importing goods and services to Africa which include:
– Introduction of new products to the market
– Provision of high quality products: if you choose to base your business on importing goods and services, chances are that, you are likely to get high quality products. This is due to the fact that international manufacturing businesses are very well aware that their reputation is based on the quality items they produce.
– Opportunity to become a captain of the industry: Since producing and introducing new improved products in the market is a continuous process, many businesses in the world at large use the chance to import new and classic products before their competitors do .On these grounds, being the first to introduce a new product in the market can easily make you a captain of the industry.
DISADVANTAGES OF IMPORTING GOODS AND SERVICE
– RECCESION – It refers to a period of temporary economic decline during which trade and industrial activity are reduced due to continued imports. Importing is basically identified by fall in GDP if continued to large extents.
– UNEMPLOYMENT – African is one of the young populations in the world. For instance, take Kenya where about 60% of population is youth who still require jobs. If Kenya should keep importing, meaning no industries, no jobs at long last poverty rate will be higher.
– ECENTRAL – You will not acquire powerful tools to increase your office productivity, grow your profitability.
ADVANTAGES OF IMPORTED PRODUCTS
Good Quality – When foods are being imported their quality is strictly checked and the best products are released to the market. If is the manufacturer try to sell low quality food, it will soon or later be banned in the market.
Reduced Cost – When particular food is being imported in large quantities, it price is even lower and it keeps both manufacturer and costumer satisfied.
ECONOMIC GROWTH– Imported food open job opportunities in various fields in order to maintain the import flow. These include intermediaries who ensure that the entire process runs smoothly.
Energy Efficiency – The energy used in one country to produce a certain product might be much lower than energy consumed to produce the same product in another country. Besides, energy for shipping the product is also lower. The cost of production and hence improved efficiency and convenience is ultimately put in touch.
Opportunity to make choices – Imports will always give room to choose between varieties of products and find the one that best suits your taste and preference. Not all countries climates allow growth of all sorts of fruits and vegetables throughout the year.
Nonetheless, even as Africa strives to get into opportunities for trade growth, it must diversify in various ways; it has to become less dependent on the stagnating markets of its traditional trading partners in the developed world while at the same time lowering dependency on the export of commodities vulnerable to price shocks.
This way, Africa will benefit greatly through bigger profits, trust and enhanced global trade whether in importing or exporting goods and services. It will consequently highly impact on the growth of Africa in the following paraphernalia:
1. Imports and exports boost development and reduce poverty by generating speedy growth due to increased commercial opportunities and investments. Moreover it will broaden and increase the GDP as a result of private sector development. For instance, in least developed African countries, as of the early 2000s, GDP per capita increased overwhelmingly due to increased trade and foreign investment.
2. Imports open up room for new innovations and diversification for African countries as they are able to access new materials which help realize new production possibilities – With more imports Africans will have access to a variety of intermediate and capital goods. As a result, industrial output will grow tremendously and broaden the economy.
3. Imports serve to enhance great competitiveness by helping Africans reduce cost of production, get finance via investments, increase on value addition to their products and move up in the global economic ecosystem – Thanks to imports, today African nations are steadily catching up with their counter parts; the developed countries every new turning day.
4. Expansion of technology – through importing and exchange of know-how, African countries continue to experience improved technologies and research methods and improvements whether through direct or indirect foreign investments – importation accounts to the rapid deployment of information and communication across almost all African countries. Today, mobile cellular coverage in Africa is at an all-time high with 75% of its population using a mobile phone device.
5. Imports have opened trade and business opportunities to greater heights as African companies can now easily export their products since the removal of unnecessary barriers for international trade by many African states – Business reforms were implemented in more than 30 African economies during the financial year 2010/2011. Currently, Mauritius, an African member state ranks amongst the best ease of doing business countries in the world. According to World Bank’s ease of doing business report, the Sub-Saharan country ranks 23rd out of 186 countries, much ahead of several European countries.
6. Imports expand choice while lowering prices for consumers through more supply sources of products and services and stiffening a stronger and healthy competition.
How importing has benefited Africa to better business deals?
There are many good reasons for exporting or importing in Africa. One of the key factors being to boost more integrated regional markets; Importing of goods and services enhances better relations with other countries which in turn will lead to a boosted trade between African countries and regions. For instance, to get the big picture, it is due to better relations and business ties that the EU recently partnered with African countries via an Economic Partnership Agreement (EPA) geared at benefiting importers and exporters in Africa through:
– Duty and quota free access for exports to the EU. The European Union allows free access to the EU market of half a billion people for the business community across Africa, the Caribbean and the Pacific.
– More simpler and flexible rules of origin- This will allow African countries to use cheaper, better quality and more innovative inputs from other countries in their exports. It will thereby help African countries move up the value added ladder instead of exporting predominantly lower value raw materials. As such, they will not be subjected to custom duties when exporting their final products to the EU.
– EPA is as well part of the wider development agenda for African countries to:
– Strengthen the rule of law
– Strengthen local investment while at the same time attracting foreign investment
– Create a booming environment for further and greater prosperity
Importance of Imports and Exports in Africa
– Africa is able to acquire what she needs from the international community to satisfy her people
– There is a ready market for Africa’s surplus good and services
– Through imports Africa has been able to grow various manufacturing industries in their economies
– Demand for Africa’s exports has led to the expansion of industries that produce these goods and services
– The general infrastructure, transport and communication network in African countries has greatly improved to ensure smooth flow and movement of trade products and services.
– Employment opportunities have been create to facilitate the handling of goods and services through jobs in the service and manufacturing industries that aid in handling of the imports and exports
– Imports and exports have greatly enhanced co-operation between Africa and other global trading partners
– Through imports and exports, traders are encouraged to specialize in a certain line of production which leads to production of high quality goods which will yield better incomes for the traders and country as whole.
Certainly, with the diverging dynamics of trade across world regions, Africa has to change from the traditional dependence on commodity exports and find new and promising opportunities for African exporters and importers by identifying policy changes that could help to tap into potential for trade.
How Africa will benefit from trading through imports and exports.
The positive development Africa has experienced recently in international trade is a good starting point to benefit even more from trade. There are several measures which should be put across in order to secure this. First it is vital for African companies start specializing even more than they do today. According to the theory specialization is one of the most important advantages to benefit from international trade. This can also increase the technology and infrastructural development on the continent, which is much needed.
With a vast internet expansion more African countries can base their exports to higher heights on already manufactured products, and less on raw materials, which in return will increase their incomes. If African countries can manage this, they may also be able to decrease high rate of poverty and dependence on other countries for relief food among other things. This, in turn, can also help Africa benefit more from international trade.
In order to eradicate poverty Africans should work very hard and create job opportunities in various fields to ensure that each and every individual participate in growing the economy, and this it can then be posted towards the exporting industries, and thus increase the incomes also at a personal level. If Africa manages to do this the future of the continent can be very prosperous, but the road there is long and demands a clear plan of action. In conclusion, there is reason to be positive for the future of Africa, if the leaders start implementing these measures. Said and done, Africa has features that attract people all over the world. This including wildlife, beautiful sceneries, vegetation and not forgetting good climate.in the recent years this has boosted the economy. Intra- Africa trade has comprised of about 13% of Africa total trade over the last two decades. This compares with intra-regional trade rates of, for example 16% in central and South America, and 62% in Asia. Africa exports to the EU and has increased substantially in the past years. Trade relations should raise economic activity and competitiveness in non-extractive sectors, leading to a high GDP growth and a huge economic diversification. They are meant to boost intra-African trade ,majorly in goods, and perhaps, increase African trade with the EU and UK .
Africa involvement in trade with other countries has driven economic integration .recently African leaders signed the TRIPARTITE FREE TRADE AREA AGREEMENT. The agreement united the three well known trade blocks namely Common market for eastern and southern Africa, the south Africa Development community and the East Africa Community.it promised to remove all the trade barriers in this vast region and still widen it market size and economic activities.it will lower cost of goods sold or purchased within the affected zones .All in all everything that has advantage still got the disadvantage. Since member states will be required to eliminate protectionism from internal industries, small industries are likely to struggle so much to compete with unprotected in the open trade zone. This might reduce industrialization efforts in smaller economies.
Another major weakness to be considered is that, Tripartite agreement does not cover trade in services, such as allowed, accounting and information technology services. Service is a huge factor to put in consideration when it comes to trade both importing and exporting goods and services. This is because it covers about 50% of exports in value-added terms and has been the major contributor to GDP in 35 African countries.
In order to achieve greater integration; African countries should invest in infrastructure and also improving connectivity across all member states. As a matter of fact it cost to import and export in Sub-Saharan African countries than any other region. Essentially, this agreement serves to reduce transaction cost. The southern Africa Development community signed a brand new economic partnership agreement with EU in June aimed to facilitate trade among some region member states (Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland) and the EU as well. This agreement was implemented shortly Britain voted to leave to leave the EU. This deal appeared to yield a fairer compared to the previous agreements. Rules and guidelines of origin was implemented allowing partial processing in more than one of the included Southern African Countries. This will importantly contribute to strengthening regional value chains. Besides that, for the first time since time immemorial, The Southern African Development Community agreement prohibits the EU from using agricultural exports subsidies.it was aimed at easing constraints on African farmers’ competitiveness.
How Waystocap can come in importation and exportation of good and services.
Waystopcan can shows the individual benefits accrued when business is involved in export as well on when involved in importation of services and goods in Africa. This will enable proprietor to make crucial decision based on the advantages enjoyed on either export or imports.
Waystopcan through its intensive analyses and research on the advantages and disadvantages of both goods and services; this will open the eyes of the potential proprietor and therefore will be able to invest wisely for the enlisted advantage and disadvantage will guide him when when selecting the right this to do.
AFRICA’S TRADE POTENTIAL