HomeLocal NewsIntra-Africa trade subdued: Report

Intra-Africa trade subdued: Report

BY ANDREW KUNAMBURA

AFRICAN countries trade more with the outside world than among themselves, according to findings by the Economic Commission for Africa (ECA).

The ECA report was presented during the 39th Committee of Experts of the Conference of African Ministers of Finance, Planning and Economic Development, which opened in Addis Ababa on Wednesday. The European Union (EU), the report says, is taking the largest share of the market accounting for 29,8% of total trade 2020.

However, following Brexit, the trend is shifting. Increased trade between China and Africa has also changed the narrative.

Stephen Karingi, Director of Regional Integration and Trade Division at the ECA, in his presentation, said Covid-19 severely disrupted the implementation of regional integration initiatives, including the African Continental Free Trade Area (AfCFTA), especially trade as land borders were shut as part of lockdowns.

“Implementation of regional integration continues to be hampered by governance, peace and security challenges,” Karingi said.

“Digitalisation is key in maintaining trade competitiveness and enabling effective participation in cross border e-commerce.”

The report shows that in 2018, Africa accounted for only 2,6% of global trade which is a slight increase from 0,2% from 2017.

Intra-African trade increased to 16,1% in 2018 (US$1591billion), up from 15,5% in 2017.
Globally, output slightly decreased to 3,6% in 2018 from 3,8% in 2017. Member states continue to strive for integration across the eight regional economic communities (RECs), although there are still outstanding challenges.

Karingi said before the Covid-19 pandemic, there was a steady rise in intra-trade, but compared to other regions, it was low.

“Trade, economic movement of people and services, infrastructure, governance, peace and security are the key pillars of regional integration,” he noted, adding that several countries were making efforts to implement the AfCFTA.

“Peace and security create environments conducive to the pursuit of regional integration and the attainment of broader continental development objectives.”

The ECA director said free movement of people was critical for the realisation of AfCFTA.

The report presents an assessment of progress on regional integration in Africa with a particular focus on progress made by RECs in key dimensions of regional, macroeconomic; productive; trade and infrastructure integration.

Free movement of people, governance, peace and security are also under the spotlight.
In all the RECs, Karingi said, productive integration was the poorest performing dimension of regional integration.

“Most of the communities are lagging in terms of intra-regional intermediate exports and imports, and are recording a very low merchandise trade complementarity index,” he said.
“Productive integration is also critical to integrating African economies into regional value chains and global value chains, as envisioned in Agenda 2063.”

According to the report, the Arab Maghreb Union (AMU) and East African Community (EAC) are taking the lead in productive integration, with index scores of 0,449 and 0,434, respectively, while ECOWAS is the least integrated regional bloc with an index score of 0,220.

Despite the low performance of the majority of the RECs on productive integration, there are several initiatives being carried out to improve the situation, including some that are supported by ECA. Economic Community of Central African States (ECCAS) and EAC are the highest-performing communities in terms of macroeconomic integration, with scores of 0,684 and 0,660, respectively, on the index.

Karingi said the ECA would continue to support RECs in boosting intra-African trade in their programmes and policies, building on the collaborative work on regional industrialisation, as has already been initiated in Sadc and Ecowas.

The region will broaden capacity-building programmes on macro-economic and forecasting models in economic planning and development, to empower member States and RECs to ratify and implement AfCFTA.

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