Traders financial behaviour is also worse than before in terms of extending and providing credit to customers.
According to the latest Africa Trade Barometer by the Standard Bank , the economic gains, built after the Covid-19 pandemic, are under further pressure due to the war in Ukraine.
This has pushed Kenya to position seven on the Africa Trade Barometer, down three positions.
However whilst there has been a slight change in Kenya’s Survey Trade Barometer ranking, it has moved down to fifth from fourth in the previous analysis.
This is driven by a lower-than-expected trade perception of export trade regulations.
The report focuses on Angola, Ghana, Kenya, Mozambique, Namibia, Nigeria, South Africa, Uganda, Tanzania and Zambia.
It presents a view of actual trade, as experienced on the ground by real African businesses transacting within and between these 10 markets, as well as globally.
Qualitative and quantitative intelligence is gathered from over 2,400 firms representing SMEs, large family businesses, corporates, and multinationals.
This insight is augmented with third-party sources, including the World Bank, the International Trade Centre and the central banks of the 10 study markets.
The survey looks at macroeconomic stability, governance and economy, infrastructure, trade openness, foreign trade, traders’ financial behaviour and access to finance.
It established that economic instability remains the top concern for firms with the imminent elections at the time of the research bringing about uncertainty and unpredictability in the business environment.
This saw business confidence drop from 57 per cent to 55 per cent while government support for trade rise to 48 per cent from 46 per cent to rank positions six and seven out of 10 countries respectively.
"Positive sentiments are driven by the belief in good leadership and economic stability, whilst those firms who are not optimistic, blame the poor economy and high prices of products as the main drivers,'' the report reads.
On most elements, Kenyan firms are placed in the bottom 40 per cent of the list, compared to other countries, and it is only on infrastructure obstacles, trade openness and credit terms advance from suppliers where Kenya ranks a little higher.
Ease of foreign trading has become more of a challenge for firms in Kenya and in terms of trader financial behaviour, there has been a significant decline in the credit terms extended to clients.
China is the leading import source country and is likely to increase in import volumes in the next two years.
When trading with the rest of Africa, Tanzania and Uganda are the leading export countries.
The quality of infrastructural aspects has, for the most part, remained the same, but there has been a significant increase in the quality of road infrastructure.
There is very low use of credit terms and not many traders extend credit terms to their clients either.
Overall, South Africa and Ghana maintained the first two positions, followed by Namibia and Uganda who climbed four and two positions respectively.
They are followed by Tanzania and Mozambique, while Nigeria, Zambia and Angola took the last three positions in that order.
The report says African trade is a key opportunity for Africa to alleviate poverty, drive economic activity and achieve prosperity for its people, Standard Bank has said in its latest Africa Trade Barometer.
By eliminating trade barriers and boosting intra-Africa trade, the AfCFTA aims to lift 30 million Africans out of poverty by increasing income across Africa, seven by 2035.
"Once implemented, it will be the world’s largest free trade area,'' the report reads.
Recent global supply chain disruptions illustrate the urgent need of building domestic value chains integrated into regional and global supply ecosystems.
Standard Bank is optimistic about the benefits of a single market and wants to harness its broad networks and expertise on the ground to play a key role in helping AfCFTA take off.
According to Standard Bank's head of trade, Philip Myburgh, Africa Trade Barometer is instrumental in solving access to information, a significant non-tariff barrier in Africa.
Beyond hard infrastructure, access to trade finance remains a challenge. While banks are important players in financing trade across the continent, perennial risks continue to limit commercial credit appetite.
“Leveraging the ability of Africa’s financial institutions to deploy capital from development finance institutions and sovereigns into effective trade finance, especially for entities that have not yet built up their credit standing, could dramatically expand intra-African trade,” says Myburgh.
Other areas where banks and the private sector could work with the AfCFTA to begin implementation in 2023, is to identify and then cooperate on leveraging growth in high-potential sectors.
