Africa’s output grew by 3.4 percent between 2017 and 2018 despite the slowdown in global growth during that period, a new report by the African Export-Import Bank (Afreximbank) has shown.
The African Trade Report 2019: African Trade in a Digital World, launched today in Moscow during the 26th Afreximbank Annual Meetings, states that Africa’s total merchandise trade in 2018 had a value of over $997.9 billion, noting that the continent remained one of the fastest growing regions in the world.
World Trade Organisation estimates show that the volume of global merchandise trade grew by 3 percent in 2018, down from 4.6 percent in 2017.
According to The African Trade Report 2019, the findings highlight the resilience of Africa’s economies to global volatility at a time of rising uncertainty, escalating trade wars and tariffs between the United States, China, and others. The resilience reflects the diversification of Africa’s trading partners in the context of South-South trade, growing fixed investment and public and private consumption, boosted by expanding urban populations and softening inflation. These factors reduce Africa’s exposure to the business cycles associated with individual countries and regions.
The report noted that while the European Union remained Africa’s main continental trading partner in 2018 - accounting for 29.8 percent of total trade - African trade with the South grew significantly over the last decade to account for more than 35 percent of the continent’s total trade in 2018. China and India further consolidated their positions as Africa’s first and second single largest trading partners, accounting for over 21 percent of total African trade in 2018. Intra-African trade also increased steadily in 2018, growing by 17 percent to reach $159 billion.
The report highlights that Africa has the potential to do more, noting that its contribution to global trade remains marginal at 2.6 percent, up from 2.4 percent in 2017, and that, while intra-African trade rose to 16 percent in 2018 from five percent in 1980, it remains low compared to intra-regional trade in Europe and Asia.
The report states that ongoing digitalization is paving the way for a new African economy, with e-commerce platforms and internet penetration expediting transactions, reducing costs and leading to a new generation of transnational digital consumers.
The report urges African governments to further capitalize on the opportunities associated with digitalization, by bolstering regulatory environments and supporting the development of digital ecosystems.
Digitalization, the reports states, can unlock Africa’s potential in driving economic development and the integration of African countries into the world economy. It can also reduce the region’s dependency on raw commodities and natural resources by helping economies diversify into more value-added products that can enhance extra-and intra-African trade.
Prof. Benedict Oramah, President of Afreximbank, said: “It is vital that Africa grasps the economic growth opportunities flowing from the African Continental Free Trade Agreement, growing domestic demand and population, and our ever-closer investment and trading links with emerging partners in the South. We must exert concerted action to ensure that we develop, industrialize and diversify our industries and supporting infrastructure to foster regional integration and participate fully in regional and global value chains.”
Chief Economist and author of the report, Dr Hippolyte Fofack said: “Intra-African trade, which grew by 17 per cent in 2018, more than three times the rate of growth of extra-African trade, was the major driver of Africa’s total merchandise trade in 2018.”