An economist with the Standard Bank Group, Jeremy Stevens, has observed that trade within the continent (AFRICA), accounts for a dismal 10 percent.
According to the economist, this is the lowest level in the world, despite trade reforms, better macroeconomic management, investments in infrastructure and more constructive trade partnerships.
This pales in comparison with North America where 40 percent of trade happens within the region, and Western Europe where intra-regional trade stands at about 60 percent.
Illustrating the marginal relevance to Africa’s economy, Stevens observed that China’s exports to Africa have increased 12-fold since 2001 and each of the other BRIC (Brazil, Russia, India and China) countries by four-and-half times, Africa’s export to other states on the continent have only doubled.
One of the cardinal reasons for the formation of the OAU in 1963, and the subsequent regional groupings like ECOWAS, SADC, COMESA etc, was to foster intra-regional trade to improve Africa’s lot. However, the lack of finished goods production means that Africa is still highly reliant on imports from overseas, while poor infrastructure constrains intra-Africa trade.
The general absence of manufacturing industries and poor infrastructure on the continent remain among the major obstacles to African economies doing business with each other.
Coupled with the above, Africa has the highest transport costs in the world almost double the world average, because of poor infrastructure.
The Paper’s lingering worry pertains to the dearth of Africa’s own production and a long standing habit to look to foreign markets. Intra-African trade should become top priority for African economies, especially in recognition that the African market of about one billion consumers could be a powerful engine for growth and employment.
Stevens notes that a host of internal deficiencies mean that the expected growth in African markets is largely inaccessible to African producers. Africa needs to invest around US$100 billion a year to upgrade, maintain and expand roads, railways, ports and other core infrastructure.
To this end, Africa’s engagement with China in this regard would go some way to accelerate the needed infrastructural development on the continent that would further serve as a catalyst to deepen intra-African trade.
