Africa must do more to unlock potential for rising intra-African trade

Growth in intra-Africa trade is outpacing trade between Africa and rest of the world. However, more needs to be done to boost intra-African trade to take advantage of the increasing commercial depth of Africa’s rapidly expanding consumer markets.

Anne-Marie Woolley and Megan McDonald, joint heads of Standard Bank’s Structured Trade and Commodity Finance (STCF) business in Africa, believe that given the right focus, intra-African trade can be a driving force for growth in Africa.

Evidence of the dormant opportunities that can be unlocked by boosting trade within the continent is particularly true of the agricultural sector, which has the potential to provide more immediate benefits than manufacturing, which takes far longer to develop.

Intra-African flows account for about 20% of Africa’s total agricultural trade activity, compared to averages of 78% for the European Union and 60% for Asia. While African countries produced just 3.5% of the world’s rice in 2011, they were responsible for 35% of global rice imports that year, indicating the potential opportunities that exist for the continent’s rice producers.

Ethiopia is another clear example, accounting for as much as 40% of Africa’s coffee exports. Yet in spite of this, Ethiopia made just 3% of the US$1.2bn it earned by exporting coffee beans in 2012 by doing business with other African nations.

“The trade data shows what can be achieved if African nations made greater strides in conducting trade with each other,” said Woolley. “They could potentially unlock billions of additional dollars simply by placing more focus on trading with their African peers.”

South Africa, the continent’s largest economy, is also missing out on potential trade opportunities within Africa. Of the $2.3bn South Africa earned by exporting fruit in 2012, only 8% came from the rest of Africa; with Angola absorbing 15%, followed by 12% for Benin and 11% for Mozambique.
Similarly, other African nations could benefit by boosting their trade links with South Africa. Of the $1.2bn of South Africa’s expenditure on cereal imports in 2012, just $19m (1.5%) was sourced from other parts of the continent; while 15% of the $86m of coffee imported into South Africa in 2012 originated from Africa. READ MORE

Source:  How we made it in Africa  #IFAMAFRICA