- The majority of CEOs in the survey believe the African Continental Free Trade Area (AfCFTA) will result in an increase in intra-African trade
- Far fewer participants reported importing goods and services from North America, South America
Intra African trade is on the rise, with at least 50 per cent of countries in the continent trading with each, a new survey shows.
According to Africa CEO survey by Pan-African Private Sector Trade and Investment Committee, half of the respondents surveyed import goods or services from other African countries.
''This is only slightly above the 46 per cent who import from Asia or the 40 per cent from European countries; although it is interesting that more respondents now import goods from China and other Asian markets than from Europe, ‘'the report reads in part.
Far fewer participants reported importing goods and services from North America, South America and, perhaps surprisingly given the role of the Gulf states in African investment, the Middle East.
The survey covered a period between August and October 2021 by respondents from 44 African countries, plus the Americas and the Middle East
It aimed to gauge business leaders’ sentiments around Intra-African trade, AfCFTA’s impact on their businesses, and different measures needed to make the AfCFTA successful, as well as their views about economic growth and recovery in Africa in 2021 and 2022.
The four top export destinations in Africa for respondents’ businesses are the four biggest Anglophone economies on the continent.
A total of 27 per cent of survey participants reported that they export to South Africa, closely followed by Ghana and Kenya, both with 25 per cent.
Most surprisingly, Nigeria comes fourth on 19 per cent despite having a far bigger economy than either Ghana or Kenya.
A relatively small number of international corporations, particularly in the oil and gas sector, account for a large proportion of its economic activity.
By contrast, both Ghana and Kenya have more diversified economies that rely more on trade.
The four countries that were the most common origin for imports are the same as the top export destinations, with South Africa leading with 18 per cent, followed by Ghana (23 per cent), Nigeria (20 per cent) and Kenya (18 per cent).
Food, drinks, and tobacco; professional services; and agricultural materials most common products exported to and imported from Africa
None of the respondents reported exporting goods or services to Angola, Botswana, Burundi, Congo-Brazzaville, Guinea-Bissau, Lesotho, Libya, South Sudan, eSwatini, or the Sahrawi Republic.
Several other countries attracted only a single respondent exporter, also highlighting the limitations of intra-African trade. While a few neighbouring states trade intensively with each other, trade occurs between many others at a very low level.
Just above half of the respondents use international shipping and African ports to import goods, while 39 per cent used sea freight for exports.
The difference reflects the continental trade imbalance, with Africa as a whole importing a lot more than it exports, and importing a wide range of manufactured goods in exchange for a much smaller range of raw commodity exports.
According to the report, 86.7 per cent of CEOs in the continent are optimistic that the African Continental Free Trade Area (AfCFTA) will result in an increase in intra-African trade; with just 2.2 per cent predicting that it will have a negative effect.
Of those who expect a positive outcome, 87.3 per cent believe that it will either have a moderate or high impact.
The AfCFTA was founded in 2018 and trading commenced early this year with the aim of eroding and then eliminating both tariff and non-tariff barriers to trade between African states to create a single market for goods and services.
The governments of almost every country have backed the bloc on the continent, with only Eritrea yet to sign the AfCFTA agreement.
The overwhelming majority of respondents believe that the AfCFTA will have a positive impact on their businesses, with 71 per cent expecting it to encourage them to invest in expanding their businesses regionally.
More than half (57 per cent) also believe that it will open up new markets to export regionally and provide the necessary frameworks to increase their regional exports (62 per cent).
Just over half of respondents expect the AfCFTA to encourage the creation of regional industrial hubs.
However, despite overwhelming optimism from the respondents on the AfCFTA’s ability to boost intra-African trade, access to information about the new bloc appears to be limited.
A massive 62.3 per cent do not know where or how to access information about the free trade area, which clearly makes it more difficult for the agreement to be understood and effective, and to actually make a difference in practice.