The Sunday Mail
Trade Focus
Allan Majuru
INTRA-continental trade is one of the crucial tools that can integrate economies, accelerate growth of countries, improve competitiveness, and heighten the economic development of economies.
Although there are immense benefits of intra-continental trade, sadly, African countries are still to unlock the benefits of trading amongst themselves.
This is because, according to the 2020 African Trade Statistics Yearbook, the “share of intra-African trade remains low: on average 13 percent over the period of the last seven years (2013-2019).”
Statistics also show that, trade between the African Union (AU) member states and the rest of the world accounts for around 80 percent of the continent’s total trade.
This means African countries have been targeting other continents more than their own. Over the past few years, China has been the largest AU trading partner, taking 16 percent of Africa products, and supplying the same markets with 19 percent of their total imports.
Other countries such as the United States of America (USA), France, and India have each accounted for 6 percent of the total imports into AU Member States.
Other top destinations for Africa products are Spain and Italy.
What this snapshot of Africa’s trade shows is that, by all accounts, the structure of the continent’s trade is not sustainable and requires urgent attention.
AfCFTA projected to boost economies in Africa
To address the challenge, AU member states agreed to set up the African Continental Free Trade Area (AfCFTA), that brings together all 55 AU Member States, covering a market of more than 1,2 billion people, including a growing middle class, and a combined Gross Domestic Product (GDP) of more than US $3,4 trillion.
The free trade area, which is the largest in the world, was developed to solve some of the leading challenges affecting intra-Africa trade.
For example, AfCFTA requires members to progressively remove tariffs on at least 97 percent of tariff lines that account for 90 percent of intra-Africa imports.
Through implementation of the agreement, African countries are expected to come up with measures that cut red tape and simplify customs procedures, which are identified as some of the major impediments to inter-continental trade integration.
Projections are that an integrated Africa will see the volume of total exports growing by almost 29 percent by 2035.
The intra-continental exports will also increase by more than 81 percent, while exports to non-African countries will rise by 19 percent.
This will make African countries more competitive, create new opportunities for African manufacturers and workers and see around 68 million people lifted out of poverty by 2035.
Intra-Africa Trade Fair
a game changer
Whilst trade liberalisation is an important factor in the success equation of AfCFTA, it is in improved business linkages among enterprises on the continent that will make it easy to realise the objectives of the continent-wide trade agreement.
This is because from statistics alone, exporters in Africa are more connected with buyers from the rest of the world than amongst themselves.
This creates problems for countries that want to increase visibility of their products within the continent.
This is where the Intra-African Trade Fair (IATF) scheduled for 15-21 November 2021 in Durban, South Africa, becomes an important cog in Africa’s trade integration.
IATF is an initiative that supports the implementation of the AfCFTA through facilitating for improved linkages between businesses on the continent.
The fair is designed to improve linkages between buyers and sellers on the continent and serves as a marketplace that will bring together continental and global buyers and sellers. More than 1,100 exhibitors and more than 10,000 buyers are expected to take part in the event, creating seamless connections between exporters and some of the leading buyers from the continent.
The second edition of IATF, which follows the inaugural event held in Egypt in 2018, allows for stakeholders to share trade, investment, and market information as well as trade finance and trade facilitation solutions designed to support intra-African trade and African economic integration.
From improved linkages between sellers and buyers in the continent, projections are that trade among African countries will improve, addressing economic development gaps that are caused by the current trade structure.
IATF building bridges
for Zimbabwe
The continent-wide trade fair which kicks off tomorrow is expected to open opportunities for Zimbabwean exporters as they will engage with other businesses from the continent, leading to building strategic businesses that will feed into the nation’s export growth.
At the event, more than 30 Zimbabwean companies will get an opportunity to get direct access to the lucrative AfCFTA market.
Participating companies, including youth-led and women-led enterprises, are drawn from sectors such as horticulture, processed foods, construction and engineering, agricultural inputs and implements, clothing and textile, packaging and printing, arts and crafts, and electricals.
Creating strong linkages for Zimbabwean exporters and buyers from the continent is going to make it easy for the country to penetrate non-traditional markets, which will go a long way in diversifying export markets, which are currently dominated by South Africa, accounting for more than 40 percent of total nation’s exports in 2020.
Further to this, the IATF holds great potential to accelerate Zimbabwe’s implementation and achievement of both the National Development Strategy 1 (NDS1) and the Sustainable Development Goals (SDGs) through increased trade and the resultant increases in foreign currency generation, improved livelihoods, and economic growth.
Allan Majuru is ZimTrade’s chief executive officer.
