JOHANNESBURG – A senior banking analyst yesterday said that intra-Africa trade is crucial for the future of the continent but warned that both industrial and manufacturing bases in Africa need to grow to achieve this objective.
Speaking at Standard Bank’s 6th Africa Media Forum here, the bank’s Senior Africa Analyst, Simon Freemantle, remarked that the lack of industrial activities on the continent is one of the main reasons that Africa’s abundant resources are still mainly being shipped off to other parts of the world where employment is created through the value addition process. “Intra-Africa trade is low because of the structural fundamentals hindering trade on the continent”, explained Freemantle. According to the senior analyst trade amongst African countries is growing fast but is still slow at about 9 percent, but this figure is still minimal when compared to intra-European trade which is estimated at about 37 percent.
From 2007 to 2011, the average share of intra-African exports in total merchandise exports was 11 percent, less than half of the 1997 peak of 22.4 percent and not even close to the 50 percent in Asia and 70 percent in Europe. Still, intra-Africa accounts for just 3 percent of global trade and a mere 11 percent of trade among African countries.
Some transporters revealed that the reasons intra-African trade is so low barely changed from a decade ago. These include slow and complicated import and export procedures, tariff and non-tariff barriers, a lack of harmonisation of operating requirements across borders and unsupportive policy frameworks for exports.
According to a United Nations report the continent’s economy will grow by 4.8 percent in 2013, and just over 5 percent in 2014. According to Freemantle the continent’s GDP growth is “patchy” but remains generally positive.
What’s encouraging, he says, is that Africa is the second fastest growing region in the world, behind developing Asia and this year the three fastest growing economies on the planet are on the so-called “Dark Continent”.
However, Freemantle cautioned that some international analysts’ lofty expectations of Africa’s performance and its attractiveness for investors should be seen in perspective. “Africa still suffers from tremendous challenges, both politically and economically, and one of the ways to overcome these challenges and to improve trade amongst ourselves is through regional integration,” he added.
By Edgar Brandt