Africa’s intra-regional trade fell by one percentage point in the last two decades to 2022, as the continent's record still lags behind other regions, Stanchart now says.
This is in terms of intra-continental trade share over total continental export, which stood at 13 per cent in 2022, the least compared to other regions.
In its report dubbed, Future of Trade:Africa, the lender says the continent’s efforts are still not enough to boost intra-trade to match regions such as Asia, where policies that incentivise industrialisation, export growth and regional integration have transformed economies.
Europe’s intra-trade stood at 67 per cent while Asia’s stood at 56 per cent for the year ending last year.
North America, South America recorded 50 and 17 per cent, respectively.
The lender therefore says for Africa to propel its intra-trade prospects, it has to leverage on the African Continental Free Trade Area (AfCFTA), which has a critical role to play in unlocking similar success and trade growth in Africa.
It however notes the existence of several challenges that must be addressed in parallel.
“Business leaders have identified regulation-based challenges such as complex trade rules, ineffective trade facilitators, high tariff and non-tariff barriers as some of the biggest challenges facing intra-Africa trade,” the report reads.
“Infrastructure inadequacies, trust and governance issues are also among the big impediments to the trade.”
The lender reiterates that the free trade agreement once fully implemented, has the potential to integrate the region’s markets, driving a more connected and prosperous future.
Combined exports of the AfCFTA member markets are expected to reach $952 billion (Sh142.2 trillion) by 2035, with the the implementation of AfCFTA expected to provide an additional boost of 29 per cent.
“Intra-AfCFTA exports could be boosted by about 81 per cent upon full implementation.”
Nevertheless, the report says Africa remains a commodity dependent region, despite a robust headline growth in exports at 7.7 per cent per annum over the past two decades.
A recent UNCTAD study shows 45 markets in the region are considered to be commodity dependent, with commodities accounting for 90.1 per cent (median), of their goods exports.
“These markets have very low export diversification. In 18 Africa’s markets, only one product accounts for more than half their total exports," UNCTAD says.
"As a result, they are disproportionately exposed to global price volatility and lose out on opportunities for local value addition.”
The international lobby says commodity dependence co-relates highly with lower levels of human and social development, slow productivity growth, income volatility, macroeconomic and political instability, as well as exchange rate volatility.
In 2021, commodity-dependent developing countries, mostly found in Africa, made up 29 out of 32 countries classified as having low human development, according to UNDP’s Human Development Index.
