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Prof. Benedict Oramah, President of Afreximbank
Abidjan, Dec 16, 2020 (AIP) – The African Import – Export Bank (Afreximbank) published on Tuesday, December 15, 2020, its Annual Africa Trade Report (ATR) which reveals that intra-African trade is essential for cushion the effects of trade tensions and external shocks.
This report reviews trade and economic developments in Africa, in a year 2019 dominated by trade wars and rising tariffs that led to a sharp slowdown in global trade. This situation has been made worse by the Covid-19, and as a result, after falling 2.8% last year, global trade is expected to contract 9.2% in 2020.
The Africa Trade Annual Report offers an in-depth study of informal cross-border trade (ITC). This is the first time that an attempt has been made to measure in detail the volume and composition of informal trade. Despite regional variations, the report highlights the importance of CTI for job and income creation, estimating that it provides a source of income for around 43% of the African population and is dominated by women.
In Southern Africa (the SADC bloc), women account for around 70% of informal cross-border trade. In West Africa, food and agricultural products constitute 30% of intra-regional trade.
“Even though informal cross-border trade represents an important part of domestic purchases and has become a major source of income to maintain household consumption levels, its contribution to GDP is hardly recognized”, commented the President of Afreximbank. , Teacher. Benedict Oramah.
Drawing on factual data to measure ITC, the report highlights the transformations needed to develop intra-African trade and move ITC into the formal sector.
The report contains many recommendations that will become even more relevant with the launch of the African Continental Free Trade Area (AfCFTA). Afreximbank, for its part, is setting up its Pan African Payments and Settlement System (PAPSS) to enable buyers and sellers to transact in local currency, while reducing the risk associated with cash transactions.
Between January and August 2020, Africa’s merchandise trade contracted 12% compared to the same period last year, with April and May showing the largest declines. The outlook for 2021 is good. Africa’s trade is expected to rebound significantly, in the wake of the recovery in global economic activity and increasing demand for African exports.
The share of African exports to Asia increased to 30.79% in 2019, while the European Union’s share fell to 24.6%. China and India have been the main drivers of the boom in trade between Africa and Asia, with the two countries absorbing 27% of Africa’s total merchandise exports in 2019.
A similar trend is observed in the origin of imports from African countries. Although the EU has always been the main source, its share of African imports has steadily declined and Asia today rivals the EU.
The value of total intra-African trade decreased by 5.2% in 2019, reducing its share in African trade, which fell from around 15% in 2018 to 14.4% in 2019.
The weight of raw materials in the value of African exports is very high. Oil and gas, despite a significant drop in prices, still accounted for 37% of total African exports in 2019.
The African Import-Export Bank is a pan-African multilateral financial institution dedicated to the financing and promotion of intra and extra-African trade. Afreximbank was established in October 1993 and is owned by African governments, the African Development Bank (AfDB), African private and institutional investors, and non-African public and private investors.
(AIP)
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