Africa’s contribution to global trade set to rise from 2% to 12% by 2033
The African Continent’s contribution to global trade is set to rise by 10 percentage points more from the present two (2) percent to 12 percent by 2033.
This is according to H.E. Reem Al-Hashimy, UAE Minister of State for International Cooperation and Director-General for Expo 2020 Dubai.
Speaking at the Global Business Forum (GBF) Africa 2021 on Wednesday, October 13, 2021, H.E. Reem Al-Hashimy averred the projected increase in the Continent’s contribution to global trade will be the result of partnerships among businesses on both the continent and outside the continent.
“Africa’s contribution to global trade is set to rise from 2% in 2013 to 12% in the next two decades. We invest through the prism of partnership, we don’t try to reinvent the wheel, but build on what already exists,” said H.E. Reem Al-Hashimy.
According to data by the United Nation’s Conference on Trade and Development (UNCTAD), Africa’s share of global exports is only 2 percent. One of Africa’s best performances was 1981 when the continent’s share of global exports was 4.1 percent. After declining to 1.7 percent in 1998 it rose to roughly 2.4 percent in 2009. Since then, Africa has continued to perform at the same subpar level.
One of the key reasons attributed to this phenomenon has been the continent’s lingering dependence on raw materials. A colonial economic model instituted to make the region a consistent source of natural resources for industrial economies mainly in the Northern hemisphere. One which has become so systemically entrenched that attempts to reverse it have proven unsuccessful.
Moreover, another element of the trade model in sub-Saharan Africa is that, foreign trade calculated in terms of both exports and imports constitutes more that 50 percent of GDP. However, these figures only reveal the lopsided nature of trade activities in the region. Irrespective of the noticeable trade undertakings, there is a heavy dependence on imports inadequately balanced by the equivalence in exports.
Trade data from UNCTAD’s 2019 economic development in Africa report showed that, intra-Africa exports with Europe, Asia and the US was 68.1%, 59.4%, 55% respectively. While that of intra African exports only accounted for 15% of trade activities. Yet, in other trade competing regions like Europe, intra-regional trade accounts for approximately 70% of all trade.
Meanwhile, the African Continental Free Trade Agreement (AfCFTA), according to the World Bank, would significantly boost African trade, particularly intra-regional trade in manufacturing.
The volume of total exports would increase by almost 29 percent by 2035. Intra-continental exports would increase by over 81 percent, while exports to non-African countries would rise by 19 percent.
Intra-AfCFTA exports to AfCFTA partners, the World Bank predicts, would rise speedily, especially for Cameroon, Egypt, Ghana, Morocco, and Tunisia, with exports doubling or even tripling.
Of the real sectors of the economy, the manufacturing sector is expected to gain the most with 62 per cent increment in production activities followed with modest gains in the services sector and smaller gains in agriculture.
The African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at $3.4 trillion.
It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures, says the World Bank.