AFRICAN TRADE

Intra-African trade down 14.4 per cent - AfDB

By comparison, inter-regional trade in Asia accounts for 59 per cent of total trade.

In Summary

Kenya ratified the deal and deposited the instruments of the deal in May 2018.

AfCFTA became operational in July after meeting the ratification threshold from other 22 countries.

African leaders pose for a group photograph as they meet to sign a free trade deal that would create a liberalized market for goods and services across the continent, in Kigali, Rwanda March 21, 2018. /REUTERS
African leaders pose for a group photograph as they meet to sign a free trade deal that would create a liberalized market for goods and services across the continent, in Kigali, Rwanda March 21, 2018. /REUTERS

Intra-African trade remained low at 14.4 per cent in 2018, with the continental countries trading more with the Asia, according to a revew by the African Development Bank (AfDB)

The Annual Development Effectiveness Review 2019, shows the activity was low against a 2015 baseline of 14.6 per cent and a target for 2018 at 17 per cent. The trade is expected to reach 25 per cent in 2025.

AfDB said non-tariff barriers and a lack of political goodwill to address the challenges impede progress.

It also cites poor infrastructure in roads and energy transmission lines constructed or rehabilitated to enhance cross-border trade.

“Intra-Africa trade could grow by up to 15 per cent if the bilateral tariffs that are applied today in Africa are eliminated and the rules of origin kept simple and transparent,” AfDB said.

The bank points to barriers that could restrain the African regional economic integration that was given a boost in March 2018 with the established African Continental Free Trade Area (AfCFTA).

The AfCFTA is projected to increase intra-African trade by 52 per cent by 2022. Kenya ratified the deal. 

AfCFTA became operational in July after meeting the ratification threshold from other 22 countries.

“By committing countries to remove tariffs on 90 per cent of goods, liberalising tariffs on services and addressing other non-tariff barriers, AfCFTA is expected to significantly increase the value of intra-Africa trade and investment,” notes the report.

According to the bank, barriers such as cost of trading across borders remains high, more than Sh245,000 (at $2384), after falling slightly in 2017.

 

According to AfDB, the countries are making initiatives to complement AfCFTA including boosting protocol on the free movement of persons, right to residence and right to establishment and the single African air transport market.

However, trade has declined over time especially in low-income countries from 22.6 per cent in 2015 to 20.4 per cent in 2018.

By comparison, inter-regional trade in Asia accounts for 59 per cent of total trade.

The report however reported a significant rise in Africa-to-Africa Investment.

The bank reports that cross-border investments reached $12 billion in 2018, up from $2 billion in 2010.

Nairobi has been reported as among other cities Johannesburg, Casablanca, Cairo and Lagos as the most significant sources and recipients of intra-Africa investment.