CHINA'S and India's newfound interest in trade and investment with Africa presents a significant opportunity for growth and integration of the sub-Saharan continent into the global economy.

But all countries need to make necessary policy reforms so as to further promote this South-South economic relation.

Africa is the only region in the world that has not been able to diversify successfully away from oil.

In the historical trade and investment between the North (developed countries) and South (developing countries), Africa has been concentrated on natural resource commodity economies.

The question now is: Can the South help Africa diversify?

Today, Africa's exports to Asia account for about one-third of Africa's total exports, and this is about the same as Africa's exports to the European Union or the United States.

In fact, the share of the EU's exports of Africa has been decreased by 50 percent since the 1990s.

And one of the reasons is the tremendous growth in Chinese and Indian trade that has taken a bigger piece of the pie.

What's good is that China and India's South-South trade and investment with Africa nowadays are about far more than oil.

They cover such areas as telecommunications, food processing, tourism and building of infrastructure, etc, opening the way for Africa to become a possessor of commodities and a competitive supplier of goods and services to these Asian countries.

Besides, a growing number of Chinese and Indian firms in Africa are on a global scale with world-class technologies: They are fostering regional and global integration of African businesses.

This is important because Sub-Sahara Africa is comprised of many countries which are small in size and land-locked. They're not able to produce on large scale.

One of the solutions to this problem is to engage in regional integrations. Our data show that Chinese and Indian firms are actually helping this regional integration more than African firms.

Africa has become a much more diversified economy in terms of economic performance today.

And this diversity is occurring not only in the oil-producing countries, but more important, outside the oil-producing countries.

Now, a third of the African population is living in countries where growth over the last decade has been at least 4.5 percent or more. These are usually non oil-producing countries.

But 4.5 percent is absolutely not enough.

Africa needs to grow at nine to 10 percent for at least two decades for development really to be successful.

What's more, Sub-Sahara Africa has had a declining share in world exports.

The contrast of a growing continent with declining exports again makes the potential role that China and India play in Africa so important.

Besides, today there is a significant imbalance between Africa and Asia in their trade and investment relations.

While Asia is becoming a significant part of Africa's trade flows, Africa is actually a very small part of Asia's trade flow.

Therefore, all parties concerned have to take policy actions for Africa to benefit.

We've found that although the level of tariffs in China and India is relatively low for Africa's exports, the structure and pattern of the tariffs actually creates barriers to Africa's exports. In particular, the pattern of tariffs is such that as the value of a commodity rises due to more processing, the tariff also rises.

Besides, data by the World Bank show that medium-size African firms are selling 13 percent raw materials to world markets.

Therefore, the policy recommendation to China and India is that they eliminate escalating tariffs so that African exporters feel free to sell not only raw materials, but also processed commodities in China and in India.

China recently has begun to lower its tariffs for African goods. That's very beneficial. But there is a lot more to be done.

There is also a key trade policy problem on the African side. Many African countries have formulated regional trade agreements among themselves that are not fostering trade, because they are confusing.

This so-called "spaghetti-bowl" of regional trade agreements is hindering regional trade in Africa.

If Africa is to develop, such regional trade agreements need to be eliminated.

If the 47 Sub-Sahara African countries are simply a free trade zone, this would enormously help regional integration on the continent.

Besides, it is also important for Africa to improve its infrastructure and stimulate more competition in domestic markets so as to improve the competitiveness of its products.

(The author is an economic adviser in the Africa region at the World Bank. This is adapted from his speech at Shanghai National Accounting Institute on January 12. The views are his own.)