fbpx

Intra-Regional Trade Boosted By Global Disruptions

01 July 2024 – African countries are expanding trade with each other in the face of global disruptions such as the Russian invasion of Ukraine and the Israel-Gaza conflict, according to the African Export-Import Bank (Afreximbank) Trade and Economic Outlook Report 2024.

The World Bank Forum estimates that road networks carry $200 billion of goods and commodities in Africa – around 10% of total continental gross domestic product. Rail remains underutilised due to lack of investment in most countries.

Speaking at the release of the report, Yemi Kale, Afreximbank’s group chief economist and managing director of research and international cooperation, said ongoing global challenges undermined the performance of Africa’s trade, which contracted by 6.3% in 2023 after expanding by 15.9% in 2022, while intra-African trade expanded by 3.2% over the same period.

“Major African exporting countries felt the impact of the challenging global environment of escalating geopolitical tensions, weak global demand, and slow global growth.”

“The continent’s merchandise trade, which achieved an impressive growth of 15.93% to $1.4 trillion in 2022, up from $1.2tn in 2021, was significantly affected, contracting by 6.3% to $1.3tn in 2023,” according to the report. “Intra-regional trade performance, in contrast, based on the trade balance, has been remarkable over the last three years.”

In 2022, the value of intra-African trade increased to about $185.1bn from $169.9bn in 2021 after two years of decline. In 2023, intra-African trade increased to $189.3bn. “This performance is reflective of the resilience of the African economy and the potential impact of the African Continental Free Trade Area’s (AfCFTA) single market for the continent as a tool to protect them from global shocks,” said Kale.

“Our analysis in the report revealed large untapped potential in intra-African trade, especially with respect to machinery, electricity, motor vehicles, and food products,” he added. There is uneven growth in intra-regional trade, with southern Africa recording 41% of intra-African trade in 2023, which is slightly down from 43% in 2022. East Africa was the second-largest contributor, accounting for 25.6% of the total in 2023.The region’s trade with Africa now exceeds that with European Union countries. In 2023, South Africa was the largest intra-African trading nation, with its share of the continental trade reaching 20.7%, followed by Côte d’Ivoire (8.4%), Egypt (4.8%) and Nigeria (4.6%).

Afreximbank’s outlook for the African Continent in 2024 remains positive despite the challenging economic environment of 2023. Most macroeconomic indicators are expected to improve in 2024 and 2025. Growth in the continent is projected to be higher than the global average. Although inflation is currently high, it is expected to continue decreasing into 2025. Source: Freight News