“The major obstacles to intra-African regional trade is multifaceted. We don’t have robust transport networks, the cross border challenge is the financial settlement payment and understanding the risk of the African counterpart is another challenge that we have,” Diamond Bank’s head of international operation Oluwasegun Olatona told CNBC Africa on Thursday.
“We have document issues that have to do with the border. The usage of ICT is also very low and as there is more knowledge about the use of ICT, this will be taken care of.”
The West African region is the European Union’s (EU) most important trade partner in Africa, and its countries account for 40 per cent of all trade between the EU and the African, Caribbean and Pacific regions.
There are different exchange control regimes in West African countries, as well as a lack of a common currency, which attributes to the difficulties of establishing lasting regional trade relations.
Logistical issues such as inadequate rail and road quality and high transport costs also add to the strain.
“In the region, you’ve certainly got intent to overcome a lot of these issues. A lot of the countries are looking at economic integration and monetary integration,” said Gregory Goeller, an executive for corporate banking Africa from [DATA SBK:Standard Bank Group].
“We’ve seen very successful economic and monetary integration with the West African monetary union, to a certain extent ECOWAS as well, but it’s not coming out in the numbers. You’re still seeing a very disproportionate amount of trade.”
Political will and a focus on improving port, rail and road infrastructure will therefore play a crucial role in creating lasting intra-regional trade relations in West Africa.
“The political issues are there, political will is there. ECOWAS is doing the best they could do and with the relative stability in the region, we expect speedy progress. There’s a consciousness for the region to have a better intra-regional trade, and that shows in no time, there’ll be more resolutions,” said Olatona.