Intra-African Trade Key to Stimulating Africa’s Growth

Obinna Chima

A report by DHL Global Connectedness Index has revealed that Africa is the world’s least connected continent.

While international trade agreements such as the African Growth and Opportunity Act (AGOA) and the recently announced Economic Partnership Agreement between European Union and Southern Africa are positive for the continent and should be encouraged, more emphasis needs to be placed on trade partnerships between African countries to drive seamless intra-Africa trade, the DHL Global Connectedness Index stated.

Managing Director of DHL Express Sub-saharan Africa, Charles Brewer noted that there tend to be a focus on doing business with regions outside of Africa, such as the United States or China.

He pointed out that African countries desperately need to start trading amongst each other, adding that the push for trade agreements should therefore not only be with international trading partners, but also amongst African countries.

“The DHL Global Connectedness Index revealed that Africa is the world’s least connected continent, when considering the ease of moving people, trade, information and finance.  “All African countries should therefore be focused on developing connectedness on the continent and building trade relationships,” he added.

When comparing intra-regional trade statistics, Africa was rated amongst the lowest, with less than 20 per cent of what is produced in the region staying within the region.

This, in essence, meant that over 80 per cent of what is produced in Africa is exported, mainly to the European Union, China and the US.
By comparison, 60 per cent of Europe’s trade is with its own continent, and in North America, the figure is 40 per cent.

The report noted that one of the region’s biggest challenge in terms of realising its trade potential is an under developed infrastructure.
But Brewer pointed out that, that this is slowly improving as several Africa regions continue to invest large amounts of capital into infrastructure development.

“Under developed infrastructure directly impacts the speed at which goods are moved into, out of and across the region.
“It also drives up logistics costs, and it is estimated that supply chain costs are up to nine times more expensive in Africa in comparison to other regions in the world. These inflated costs also ultimately hamper economic growth in the region,” he added.

Brewer further added that while progress on infrastructure development and investment should continue, a push now needs to be made by African countries towards developing and implementing trade agreements which will encourage trade between the regions.