Intra-African trade? The African Development Bank invites you to a virtual panel discussion themed Intra-Africa Trade in the Age of COVID-19 – Issues, Challenges and Way Forward as part of the wider Cultivate Africa dialogue.. United Nations Economic Commission for Africa. Figure 6.1 shows that, except for Rwanda, Senegal, and Sudan, African economies did not diversify their exports. “Petroleum exports from Africa to the rest of the world stood at US $85 billion, yet Africa’s fuel imports from outside the continent ranged between US $63 billion and US $84 billion from 2010 to 2015,” it reads. Trade between African countries has the greatest potential for building sustainable economic development and integration, says African Economic Outlook 2017, a flagship report of the African Development Bank released in Ahmedabad on Day 1 of its 52nd Annual Meetings, which commenced on Monday in the Indian city. Women constitute 70 per cent of Africa’s informal cross-border traders, and according to a 2019 study by UN Women titled Opportunities for Women Entrepreneurs in the Context of the AfCFTA , African women traders often confront corruption, insecurity and sexual harassment. The report also cited low manufacturing and processing capacity as a major limiting factor for trade among African countries. Africa had the lowest level of intra-regional trade, at just 18%. Dec 11, 2020. Trade diversification of exports is important as it allows countries to build resilience to movements in demand, due to economic downturns in importing countries but also price dips. Stress and mental health check for leaders . On the diversity criteria, African exports have generally lagged behind, and there is no evidence of quality convergence. Hausmann, Ricardo, Jason Hwang, and Dani Rodrik. The AfCFTA can play a game-changing role in Africa’s economic diversification and inclusion. 2018. While intra-Africa trade in agriculture has been growing over the years, the levels remain significantly below the potential. Dec 11, 2020. The free-trade area is the largest in the world in terms of the number of participating countries since the formation of the World Trade Organization. This is an important reason to expect that trade will be a key driver of growth in Africa. In the case of commodity exporting countries it supports a shift from an over dependence on commodities to higher-value added products and services.3 Economic diversification allows for more inclusion of small and mediumsized enterprises and helps encourage innovation as more markets open. African countries called upon to go beyond political promises for the implementation of Intra-African trade, which still faces lack of infrastructure and financing. Subscribe. The AfCFTA is set to create a single continental market for goods and services to boost intra-Africa trade, economic growth and development. Tweet on Twitter. The AfCFTA will make vast improvements in catching intra-African trade up with the numbers of the rest of the world. Intra-African trade is dominated by a handful of countries, selling a handful of products. Furthermore, although the AfCFTA can address many important demand-side constraints to trade, particularly those linked to market size, supply-side constraints must also be addressed. According to the African Development Bank (ADB), intra-Africa exports amount to only 16.6% of total trade. Widely spoken about in intra-African trade conversations are the challenges that women traders face. This apprehension is not without cause. However, the reduction in government revenues, from tariffs, would be made up with an increase in income tax and value added tax. Analysis by the African Export-Import Bank (Afreximbank) shows that one of the reasons why intra-African trade is at 16% of total African trade, on average, is the lack of access to trade … Diabetes and your diet . The debate on the benefits of trade has dominated this decade, and Africa has cast its vote for more and better trade with itself. The quality growth has been especially substantial in manufacturing, although the quality of commodities has also increased due to the development of vertically integrated industries. August 23, 2017. https://agra.org/doubling-productivity-and-incomes-of-smallholder-farmers-in-africa/. The signing of the AfCFTA in Kigali comes at a time when the benefits of trade are actively contested, and global powers that traditionally promoted trade as a crucial driver of growth are now calling into question its very tenets. It was created by the African Continental Free Trade Agreement among 54 of the 55 African Union nations. Intra-African trade in manufacturing declined from 18% in 2005 to about 15% between 2010 and 2015. Get the best of world News delivered to your inbox daily . Unfortunately, the African Continental Free Trade Agreement (ACFTA) did … For 2019, 27% of South Africa’s world exports and 12% of world imports were intra-Africa. “From 2007 to 2015, the continent’s light manufactured goods imports tripled to reach US $260 billion. Within Asia, several countries, namely Korea, China, Vietnam, and Thailand, have converged toward the world’s quality frontier largely as a result of integration in regional and global value chains (see Figure 6.3). Dec 11, 2020. This is not an opportunity to be missed and 2019 will be a defining year. Botswana and South Africa export the most sophisticated goods while Rwanda and Uganda have made the greatest improvements over the past three decades. Between 2018 and 2019, South Africa’s trade with the rest of Africa declined; the same holds true for South Africa’s world trade. Guidance for the Brookings community and the public on our response to the coronavirus (COVID-19) », Learn more from Brookings scholars about the global response to coronavirus (COVID-19) ». “An Empirical assessment of the African Continental Free Trade Area Modalities on Goods.” UNECA. Dec 11, 2020. Meanwhile, 13% of Africa’s world imports were intra-Africa imports. Recent evidence by ECA shows that when African countries trade with themselves they exchange more manufactured and processed goods, have more knowledge transfer, and create more value. Other questions to be explored include: It is projected, through the sole removal of tariffs on goods, to increase the value of intra-African trade by between 15 percent (or $50 billion) and 25 percent (or $70 billion), depending on liberalization efforts, in 2040, compared to a situation with no AfCFTA in place. IATF is the key event boosting trade in Africa. It is broadly recognized that, while globalization and trade produced the impressive economic expansion of the past three decades, the gains have not been fairly distributed. United Nations Economic Commission for Africa. Now that the vaccine is here… Dec 11, 2020. Increased value addition and sophistication increases productivity and increases the overall value of exports.6. Trade facilitation is key to reducing non-tariff trade costs, and is important for ensuring inclusive benefits since landlocked countries and small, informal, and female traders are usually more burdened by inadequate trade facilitation. This 4-page infographic provides a visualisation of intra-Africa trade in 2017. The recent United National Conference on Trade and Developments report shows that Intra-African exports were 16.6% of total exports in 2017 and … Diversification should also lead to increased sophistication of export products. It also endorsed an Action Plan for Boosting Intra-Africa Trade (BIAT). It is also productivity enhancing. The question, therefore, becomes whether the pandemic could be used as an opportunity to expand intra-African trade in agriculture and create as well as expand regional supply chains. The rest of the paper is organized as follows. Africa’s GDP and its internal trade expanded fourfold over the past two decades, according to the report, which suggests that that intra-African trade is more resilient than exchanges with other regions of the world, largely because manufactured goods are less susceptible to price shocks which affect primary products that constitute over 50% of trade between the continent and other countries. Why airfares have doubled in Nigeria but remain stable in African peers . ECA’s report on Bringing the AfCFTA About highlights that the AfCFTA potentially embodies a “win-win” approach such that all countries across Africa and vulnerable communities within these countries receive benefits from the agreement. Share on Facebook. Increased investment in intra-African trade would produce a positive catalytic effect to Africa’s growth story. If only . Estimates from the Economic Commission for Africa (UNECA) suggest that the AfCFTA has the potential both to boost intra-African trade by 52.3 per … In fact, manufactured goods make up a much higher proportion of regional exports than those leaving the continent—41.9 compared to 14.8 percent in 2014. Contrary to popular notion, the heterogeneity of national exports helps intra-African trade as the spread of products across the continent allows for more trade between regions with large food demands. Other countries, such as Botswana and Mali, have successfully moved up the value chain within their natural resource sectors. The AfCFTA is complemented by other continental initiatives, including the Protocol on Free Movement of Persons, Right to Residence and Right to Establishment, and the Single African Air Transport Market (SAATM). Intra-African trade is the average export and import activities among African countries. Unfortunately, the African Continental Free Trade Agreement (ACFTA) did not kick off on 1 July as originally scheduled, due to the coronavirus crisis, but … In 2021, IATF’s theme will focus on the newly-launched African Continental Free Trade Area (AfCFTA) - a single market for goods and services across 55 countries, aimed at boosting trade and investment. Newsletter. If successfully implemented, the agreement will create a single African market of over a billion consumers with a total GDP of over $3 trillion. Johannesburg, Wednesday 09 th September 2020 – Brand South Africa today hosted an Africa nexus research reference group webinar with key objectives to determine insights and perspectives on how the African Continental Free Trade (AcFTA) could enable … Although global poverty has fallen, prosperity has not been fully shared. Stress and mental health check for leaders . While intra-Africa trade in agriculture has been growing over the years, the levels remain significantly below the potential. Movement from political will to policy action as far as improving regional cooperation is ongoing but remains slow to materialize. Additionally, building productive capacities through re-skilling programs will be crucial to ensuring that displaced workers and vulnerable persons are able to participate in welfare-enhancing African countries must develop effective policies and strategies for exports, and identify new opportunities for diversification, industrialization, and value chain development. Songwe, Vera, and Deborah Winkler. Moreover, detailed Intra and Extra African Union trade statistics are needed to evaluate the effectiveness of the measures taken by African leaders to boost Intra African trade, which have a high impact for the economic development of the continent. The AfCFTA offers particular potential for agricultural products. In particular, Africans must be equipped with the skills needed to engage in skill-intensive manufacturing industries such as apparel and machinery. Nairobi, Kenya, 8 October 2019 – A senior Economic Commission for Africa (ECA) expert says boosting intra-Africa agricultural trade is crucial to spur economies on the continent and ensure there is food security across nations. trade flows in Africa becomes significantly important due to the very low levels of intra-African trade. Intra-Africa trade has been historically low. Alternatively, the share of intra-African trade would increase by nearly 40 percent to over 50 percent, depending on the ambition of the liberalization, between the start of the implementation of the reform (2020) and 2040.2. For instance, resource-rich countries, can obtain supplies from countries with more advanced agricultural productivity. By way of comparison, intra-trade levels in … In these countries, knowledge transfers to other export sectors can unlock the potential of established or emerging industries. Over the past three decades, exports from East Asia have increased in both diversity and quality. Since then, many Member States have also ratified the Agreement. If the AfCFTA is to fulfill its potential in diversifying and transforming African economies in an inclusive manner, however, African countries must develop effective policies and strategies for exports, and identify new opportunities for diversification, industrialization, and value chain development. ECA’s modeling projects that by 2040, the AfCFTA will increase intra-African trade in agricultural products by between 20 and 30 percent, with the highest gains in sugar, vegetables, fruit, nuts, beverages, and dairy products.5 The agreement is expected to expand access to markets at the regional and international levels, thus generating state revenue, increasing farmer income, and expanding both farmer and country capacity to invest in modernizing the agricultural sector through processing and mechanization. Last week, 44 African nations came together and signed the Continental Free Trade Agreement (CFTA). Nonetheless, Africa’s trade and regional integration face several obstacles. These include meeting the needs of the new concept of regionalism which requires a broader approach to reducing administrative and transaction costs and overcoming market segmentation; which pose challenges that require scaling up infrastructure investment to improve connections between and within African countries. 2012. Dec 11, 2020. Currently, trade barriers mean that poor farmers in rural areas are denied access to markets in neighboring countries that would deliver higher returns. Diabetes and your diet . Like the East Asian economies, they may have reached a saturation point to quality improvement within existing sectors and may need to target new geographic markets that can provide greater scope for growth and innovation to improve their competitive advantage. Greater intra-African trade is likely to have a more direct impact on poverty by creating opportunities for the poor who both produce and trade the basic foodstuffs that dominate intra-regional trade. While today African countries are now independent, the colonial legacy lingers in the transport infrastructure. In part, this is a result of the European colonization across Africa in the 19 th and 20 th centuries. Intra-African exports were 16.6% of total exports in 2017, compared with 68% in Europe and 59% in Asia , pointing to untapped potential. “Industrializing through Trade: Economic Report on Africa 2015.” UNECA. The transition phase to the Continental Free Trade Area alone could generate welfare gains of $16.1 billion and boost intra-African trade by 33 per cent. Product sophistication refers to the share of value addition in a product, or product upgrading. “An Empirical assessment of AfCFTA Modalities on Goods.” UNECA. Dec 11, 2020. No other event brings together more professionals under one roof. https://doi.org/10.1007/s10887-006-9009-4. However, quality improvement of the export basket has been sluggish elsewhere, with some reversals, and there is considerable cross-country heterogeneity within regions. The World Bank population-weighted Gini index shows that inequality rose steeply between 1988 and 1998 and declined only moderately by 2013. The AfCFTA as a result should stimulate demand for intra-African food imports, supporting a predominantly women-led sector. “Doubling Productivity and Incomes of Smallholder Farmers in Africa.” AGRA: Growing Africa’s Agriculture. Intra-African trade is dominated by a handful of countries, selling a handful of products. Non-Tariff Barriers – and how to break them down . Between 1990 and 2014, as most fastgrowing countries in the world diversified their economies, most African countries instead relied on rents from extractive industries. And Development how to break them down major step in this direction the! 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