Africa Surpasses Asia and Europe as Preferred Trade Market
By Elizabeth Antidius Shumbusho | Africa Guardian
Africa’s intra-continental trade is gaining momentum, driven by easier cross-border transactions, improved quality of locally made goods, and more competitive pricing compared to markets in Asia, the US, and Europe. According to the latest Africa Trade Barometer, African businesses are increasingly opting to trade within the continent rather than with countries outside Africa, marking a shift in regional trade dynamics.
The Standard Bank Africa Trade Barometer, which tracks 10 African countries that are part of the African Continental Free Trade Area (AfCFTA), reveals that 37% of businesses now prefer trading with partners based within Africa. This is in stark contrast to preferences for Asia (24%), Europe (16%), and North America (3%). Countries like Namibia (75%), Tanzania (48%), and Angola (43%) show the highest inclination for intra-African trade, while businesses in Nigeria and Kenya remain more focused on Asian markets, particularly China.
The survey indicates that businesses find it easier to trade within Africa, with factors like product quality (72%), market prices (51%), and accessibility (38%) driving this preference. The improvement in intra-African trade sentiment is further reflected in increased focus on strong trading relationships and affordable transport solutions, with these considerations rising significantly between May 2023 and August 2024.
The continued implementation of the AfCFTA is a major catalyst for easing trade barriers, particularly with the Guided Trade Initiative (GTI). Launched in 2022 with eight countries, this initiative allows select goods to be traded under preferential tariff arrangements. By the end of 2024, the GTI is expected to include up to 30 more African nations and expand the range of goods being traded, including biopesticides, packaged moringa, tea, coffee, and meat products.
In November, Kenyan Micro, Small, and Medium Enterprises (MSMEs) began their first exports under the AfCFTA framework, marking the launch of TradeConnect. This initiative aims to transport 1,000 containers of goods worth US $1.2 million across the continent in the next year, helping boost Kenya’s exports by 10% annually and reducing logistics costs by 30%.
The rise in intra-African trade is also supported by growing regional infrastructure, such as the Standard Gauge Railway (SGR) in Kenya, which connects the port city of Mombasa to Nairobi, with planned extensions to Uganda and other neighboring countries. Once fully operational, the SGR will span 3,800 kilometers, linking Kenya to Uganda, South Sudan, the DRC, Rwanda, Burundi, and Ethiopia, further lowering costs and improving lead times for goods across borders.
The Barometer shows a slight increase in intra-African trade as a share of total African trade, rising from 13.6% in 2022 to 14.9% in 2023. Despite this shift, businesses continue to cite challenges when trading with China, with the majority pointing to high shipping costs (50%), tariffs (37%), and currency fluctuations (28%) as barriers to trade. This mirrors the broader decline in imports and exports between the US and Africa, with trade between the regions falling by 7.3% and 6.2% respectively between 2022 and 2023.
The growing preference for intra-Africa trade and the continuous development of trade-friendly infrastructure signal a promising future for the continent’s economy, with local businesses increasingly looking within Africa for opportunities.
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