New AfreximBank African Trade Report shows 18.6 percent growth of intra-Africa trade in 2022

The African Export-Import Bank (AfreximBank) 2023 edition of the African Trade Report examines trade and economic developments in Africa and other parts of the world during 2022. The executive summary of the report, available on the AfreximBank website, notes that also in 2022 African trade was characterised by very few manufactured exports, highly concentrated in a limited number of countries, driven by a few sectors. Concerning intra-Africa trade, the report shows that its value reached US$193.17 billion, growing by 18.6 percent in 2022.

Despite this positive achievement, the degree of regional integration in Africa is estimated to be almost six times lower than in developing Asia. African countries are therefore encouraged to develop their manufacturing sector to accelerate the process of structural transformation. To this end, it will be essential to promote the expansion of investment, both domestic and foreign, create the appropriate conditions to benefit from the potential positive effects of FDI, address all forms of trade barriers both tariff and non-tariff, and implement friendly industrial policies to catalyze the development of large and more efficient production base.

Instrumental in achieving these objectives is the African Continental Free Trade Agreement (AfCFTA). If this Agreement will be successful in lowering barriers to trade in goods and services, the traditional reliance on the global value chains (GVCs) will reduce and Regional Value Chains (RVCs) will boost in Africa with positive effects for the diversification of exports.

The AfreximBank report also recognizes regional cooperation as a key tool for facilitating cross border production and promote more integration into GVC and RVC as well as climate change mitigation, and regional public goods production. Also in this regard, it is desirable that the different systems of Rules of Origin (RoO) adopted by African Regional Economic Communities, which currently hinder trade expansion, will be in future merged under a single continental framework of AfCFTA RoO that replaces them.

However, for the moment, complexity in the management of RoO regimes by African Customs seems to increase, also due to the different Free Trade Agreements that they still administer with third countries and trade blocks external to Africa. A communique published this morning on the European Union (EU) website announced that negotiations for an Economic Partnership Agreement (EPA) between the EU and Kenya have been finalized today. This agreement, which will include another separate set of RoO aimed at identifying goods that qualify for preferential treatment, will be the fourth EPA concluded bilaterally by the EU with African countries (other bilateral EPAs are in force with Cote d’Ivoire, Ghana and Cameroon), while regional EPAs have been concluded with the SADC and the Eastern and Southern Africa (ESA) blocks, even they have not yet been signed by all the members of these two groups of countries.