It’s a well-established fact that intra-African trade remains low compared to intra-regional trade in other parts of the world. Many have also identified this economic integration as the primary key to unlocking Africa’s full economic potential. However, one of the critical factors that have always frustrated intra-regional trade is the lack of updated information on the resources or raw materials that are available in African markets.
Dr Benedict Oramah, President of the African Export-Import Bank (Afreximbank) reestablished this claim during a breakfast event organized by the bank in Busan, South Korea to promote the first Intra-African Trade Fair (IATF) scheduled to hold in Cairo from 11 to 17 December 2018. He explained that unlike in relatively mature markets where information on the sources and suppliers of specific goods and services were seamlessly available, the situation was different in Africa.
Most African manufacturers don’t know that they can source raw materials from the continent and traders are not aware that enormous demand exists for their goods in neighbouring markets.“We [Africans] are more familiar with other markets than our own rich market,” the president said.
He cited a recent study sponsored by the Bank, in partnership with United Nations Conference on Trade and Development (UNCTAD) and the Commonwealth Secretariat, which showed that South Africa imports leather from India at double the price Ethiopia exports the same input. Mauritius and Nigeria also import leather products from Italy and Belgium at much higher costs than what South Africa and Botswana export them. Similarly, Kenya imports raw hides from New Zealand while Burundi exports the same product at a much lower price.
The current composition of intra-African trade is heavily skewed towards commodities, particularly oil and precious minerals such as diamonds and gold, which have made commodity exporters and importers gain a larger share of intra-African trade. Countries like South Africa, Nigeria, Namibia, Côte d’Ivoire and Egypt are among the largest intra-African exporters.
In addition to large corporations who already have the market presence in Africa, small-scale farmers, traders and businesses could benefit hugely from an up-to-date market information that enables them to negotiate with buyers from a position of greater strength. It could also help buyers have an idea of the quantities and varieties of a raw material available in another country to aid buying decisions.
The African Continental Free Trade Area (AfCFTA) was designed to reduce barriers to trade, such as removing import duties and non-tariff barriers in a bid to boost intra-continental business. Many critics have also identified lack of transport infrastructure and the poor quality of transport services within countries and across borders as a hindrance to the success of the deal, which has since been signed by 44 African countries.
Afreximbank has also said it is arranging up to $2 billion in financing support to Angola for essential imports including food items and pharmaceuticals, the bank’s President Benedict Oramah said yesterday. $1 billion is to be offered under the bank’s Investment Guarantee Refinancing Facility (ICREF) to facilitate private sector investments in industrial and non-oil productive activities, including export manufacturing, fishing, agri-business and tourism in Angola.