Implications of the african continental free trade area agreement has been prepared at a time when concerted efforts are being made across the continent by both sovereign and corporate. African trade by addressing key priority areas for moving the agenda forward. However, it is a relationship defined predominantly on exports to. Boosting intraafrican trade and deepening regional market integration constitute a necessary response to the challenges facing africa in the multilateral trading. Action plan for boosting intraafrica trade united nations. Made in africa rules of origin for enhanced intraafrican trade. A brief on the african union program on boosting intra african trade 1. This is to be understood in contrast with the view of tilly and ardant 1975, who argue that it was the need to secure and defend territory that gave rise.
A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. Developments on the boosting intra african trade initiative and the continental free trade area the assembly of the african union, during its eighteenth ordinary session that was held in addis ababa, ethiopia, in january 2012, adopted the decision 1 to establish a continental free trade area cfta by the indicative date of 2017. Information on total, share, direction, and evolution of african trade is provided. It is intended to serve the needs of researchers, policy makers, and the public who work on trade issues. Trade is an essential tool for development in any economy. Afreximbank african trade report 2019 5 while extra african trade increased by more than 5 percent in 2018, the value of intra african trade expanded by over 17 percent, to account for 16 percent of total african trade during the. Therefore, there is a need to evaluate the interrelationship between african trading blocs and economic growth of the african continent. The key findings are that intra africa trade is still low, despite. The bank was established in october 1993 by african governments, african private and institutional investors, and non african investors. Promoting connectivity in africa the role of aid for trade in boosting intra african trade table of contents abbreviations and acronyms v acknowledgements vi introduction 1 1. For these reasons, expanding intraafrican trade is a key to accelerating economic growth on the continent.
Economic obstacles to expanding intraafrican trade. Pdf the potential for intraafrica trade and regional integration. Nigeria to increase share of intra african trade tralac. To address this challenge, afreximbank decided to, among other initiatives, convene the iatf every two years to provide trade and market information and to connect buyers and sellers from across the continent. It presents foreign trade data in sixteen chapters for all african countries for the period 2004 to 2012.
I chaired a very lively seminar on friday afternoon that focused on the question, can africa trade with africa. Compendium of intraafrican and related foreign trade. Fully 30% of south africa s exports are to other countries in africa, but a massive 83% of this volume is into southern africa. Intra african trade in intermediates offers broader scope for regional chains to emerge 109. The continent is plagued by poor and underdeveloped transportation infrastructure, limiting accessibility. Effects on trade 59 revised 1991 year of entry into force 1994 ye ar of entry into force 1992 asean intra ye ar of entry into force 1975 year of entry into force 1994 year of entry into force 1991 asean extra 0 2 4 6 10 14 12 8 16 cacm intra cacm extra 0 5 10 15 20 30 35 25 40 ecowas intra ecowas extra 0 5 10 15 20 25. Intraafrican trade how is intraafrican trade abbreviated. Intraafrican trade in context a frica, which covers approximately 30 million square. But for technology to be able to transform trade in africa, there are a few important steps we must first take. In 2014 in europe, for example, 69% of exports were to other countries on the continent.
African department trade integration in the east african community. New afreximbank strategy to increase intraafrican trade to. Just like what is happening in the regions mentioned above, the development of intra regional trade will for sure provide it with means to cope with international competition that its countries, taken individually, could hardly resist up. Common market for eastern and southern africa and the southern africa development community tripartite free trade agreement tfta, as well as to the proposed 2017 continental fta cfta between cairo and cape town. There is one way of boosting intra regional trade, and with it economic growth and development. Jul 04, 2012 the need to enhance intra african trade among african countries led to the formation of the eaccomesasadc east african community. Intraafrican trade in intermediates offers broader scope for regional chains to emerge 109. Intraafrican trade extremely low east african community.
Trade patterns in the sadc region key issues for the fta 3 introduction this policy brief examines trade patterns in the southern african development community sadc over the period 1980 to 1997. Intraafrican trade in context a frica, which covers approximately 30 million square kilometers, is the secondlargest continent in the world and approximately three. In comparison with other regions, intraafrican trade still plays a trifling role in the continents overall trade. Especially in the developing countries where infrastructure deficit is a big challenge, trade. The fact that some of these countries are important in terms of regional gdp suggests that removing obstacles may help expanding intra african trade and, hence, initiate the growth spillovers. Today, intra african trade is only 16% of total african trade. African trade, largely because most african countries belong to the world trade organization wto, and so have ratified the articles of the general agreements on tariffs and trade gatt 1994, as well being signatories of regional trade agreements rtas. Jul 12, 2018 the 2018 edition of the african exportimport banks annual flagship report the african trade report titled boosting intraafrican trade. The potential is evidenced by the experience of countries such as kenya, where greater. Although the clearing house was highly utilized in the 1980s and early 1990s when most member states imposed strict exchange controls, it is being restructured to enable real time gross settlement payments in.
The african growth and opportunity act agoa was signed into law on may 18, 2000. Intraafrican trade extremely low posted in press release. Against this background, the economic development in africa report 20, subtitled intra african trade. African countries called upon to go beyond political promises for the implementation of intra african trade, which still faces lack of infrastructure and financing. Afreximbank appoints kanayo awani md for intraafrican trade.
On the road to the african continental free trade area. We should note, that there is a need to enhance the level of intraafrican trade, thereby making it an important driver of development and regional integration in africa as is the case in other regions of the world such as the eu and asean. There is a consensus that developing countries would gain more from free trade huff. Own calculations based on data from unctad gdp, trade and afdb fdi despite the great economic importance of services for africa, trade in services tis on the continent remains far below its potential. This historic summit decision is aimed at deepening africa s market integration and using trade to serve more effectively as an instrument for the attainment of rapid and sustainable socioeconomic development. We should note, that there is a need to enhance the level of intra african trade, thereby making it an important driver of development and regional integration in africa. This study examines the potential for intra africa trade and the prospects of advancing regional economic integration through such trade.
Trade costs and inclusive growth world trade organization. South africa is the most active country in intra africa agricultural trade. The share of services in african economies 20162017. Why trade facilitation is important for africa barbara rippel november, 2011. Improving the perspective for regional trade and investment in west africa. More emphasis needs to be placed on trade partnerships among african countries to drive seamless intra africa trade, an economic survey has shown. The action plan for boosting intra africa trade, as endorsed by the au summit, contains seven major clusters, the implementation of whose programmes and activities is aimed at addressing the key constraints and challenges of intra african trade and at significantly enhancing the size and benefits of the trade for the attainment of sustainable. Africa needs to trade with itself world economic forum. This article is part of the world economic forum on africa. A shift in expectations for intraafrican trade global.
Intra regional trade is a growing african story 20 compared with other regions of the world, trade between african countries is low because several countries export the same goods, unprocessed commodities, which precludes the need to trade with each other. Moreover, for the southern african development community sadc, the east african community eac, and the sacu, trade within these regions represents more than 70 percent of their member countries intra regional trade. Apr 05, 2016 the african exportimport bank afreximbank is the foremost pan african multilateral financial institution devoted to financing and promoting intra and extra african trade. African governments want to achieve their objective of boosting intra african trade, they have to create more space for the private sector to play an active role in the integration process. More emphasis needs to be placed on trade partnerships among african countries to drive seamless intraafrica trade, an economic survey has shown. Boosting intra regional trade in africa, and also within the southern african development community sadc, has for some years now been an important focus of the regional integration agenda. The african union launched afcfta negotiations back in 2015 with the hopes of boosting intraafrican trade, which falls behind pdf trade. Can intraafrican trade unlock africas industrial potential. Improving the perspective for regional trade and investment. Cesdosed researches intra african trade and economic relations.
We have gathered analysis and commentary from politicians, practitioners, scholars and experts and asked them to give us their analysis of the major bottlenecks on the road. Africasouth and intraafrican trade, taking advantage of economies of scale. Nontariff barriers and other impediments to greater intra african trade are examined with reference to available literature and discussions the authors have had with trade experts and policy. One reason is lack of access to trade and market information. However, intraafrican trade as a proportion of the continents overall trading activities has been slower to climb, going from around 10% in 2002 to % in 2014. Trade between african countries has the greatest potential for building sustainable economic development and integration, says african economic outlook 2017, a flagship report of the african development bank released in ahmedabad on day 1 of its 52nd annual meetings, which commenced on monday in the indian city. To unlock the potential of intra african trade and boost competitiveness, governments. The earliest of the 3 great west african states emerging ca. Expanding intraafrican trade trademark east africa. It was created by the african continental free trade agreement among 54 of the 55 african union nations. The african union launched afcfta negotiations back in 2015 with the hopes of boosting intra african trade, which falls behind pdf trade within other regional blocs.
Intraafrican trade is key to sustainable development. To unlock the potential of intra african trade and boost competitiveness, go. It also endorsed an action plan for boosting intraafrica trade biat. May 15, 2016 the african exportimport bank afreximbank is the foremost pan african multilateral financial institution devoted to financing and promoting intra and extra african trade. The share of intra african exports as a percentage of total african exports has increased from about 10 percent in 1995 to around 17 percent in 2017, but it. The complexity of trading in and with many african countries and the attendant. It is especially important for the continents many small, noncoastal countries that face tremendous challenges trading internationally.
The banks vision is to be the trade finance bank for africa, and its mission is to stimulate a consistent expansion, diversification and development of african trade, particularly intra african trade, while operating as a firstclass, profit oriented, socially responsible financial institution and a centre of excellence in african trade matters. Today, there is strong consensus among african leaders that regional integration is indispensable to unlock economies of scale and sharpen competitiveness. An issues paper fleshing out key issues and challenges for enhancing intra african trade, including guidelines for fasttracking the continental free trade. This makes greater african trade integration central to our own goal of ending poverty by 2030, and to the aspirations of african governments and communities. There are many regions and countries of the world that have been able to lift their peoples from poverty to prosperity through trade. Nigeria and intra africa trade nigeria trade info center. Potential implications of digital transformation for intraafrican trade 115. Intraafrican trade is extremely low and currently accounts for only 10% of all commerce on the continent, ugandas prime minister rt. The paper argues that intra african economic cooperation and integration has been poor as it fails to meet international standards. Intraafrican trade in context brookings institution. Talkmore chidede, tralac researcher, discusses how intra regional trade in the southern african development community can be improved.
African growth and opportunity act international trade. The african continental free trade area afcfta is a free trade area which as of 2018 includes 28 countries. Accelerating growth through improved intra african trade brookings africa growth initiative 2 other regions of the world enjoy significantly higher levels of internal trade. According to the united nations economic commission for africa uneca the african continental free trade agreement afcfta has the potential to boost intra african trade by 52. Due to africas relatively low share in global trade, some have. Africa comes i together international monetary fund. Intra africa trade the key to boosting african economies. How can transport infrastructure promote trade and. Developments on the boosting intraafrican trade initiative. Pdf the potential for intraafrica trade and regional. May 23, 2017 world bank data reinforces the hypothesis that the levels of intraafrica are inadequate, between 2007 and 2011 intraafrican trade accounted for only 11% of africas total trade, the lowest of. This first issue is dedicated to regional integration on the african continent, following last months african union summit on boosting intraafrican trade.
The implementation of common frameworks for the construction of regional infrastructure networks such as au agenda 2063 and pida is expected to boost intra african trade, which has been identified as having more manufacturing valueadded content than africa s trade with the rest of the world. Subsaharan africa is one of the fastest growing regions in the world. The choice of the theme was both appropriate and timely, given the challenges that were facing the trade, and the e need to come up with strategies to improve the situation. Journal of african trade vol 1, issue 1, pages 152. Boosting intra african trade and deepening regional market integration constitute a necessary response to the challenges facing africa in the multilateral trading system and the global economy. We believe that tackling barriers to intra african trade can have disproportionate, positive effects on the poorest people. Mcintyre1 authorized for distribution by godfrey kalinga july 2005 abstract this working paper should not be reported as representing the views of the imf. Pdf barriers to intraafrican trade and the african. And yet, while trade might be the gateway to development, the statistics in africa arent too impressive, especially when it comes to one of the biggest opportunities for growth.
Accelerating growth through improved intra african trade brookings africa growth initiative 1 introduction. The free trade area is the largest in the world in terms of the number of participating countries since the formation of the world trade organization. South africa is facing shrinking demand in its traditional export markets and has to. Us trade and investment relations with subsaharan africa. Smart industrialisation through trade in the context of. Thus a major lesson to be drawn from the systemic shocks in the global economy is the need for africa to promote intra regional trade. The african continental free trade area will lead to the creation of a single continental market of more than 1. Intraafrica trade the key to boosting african economies. African regional trade agreements and intraafrican trade. How a successful trade facilitation measure can address intraafrican. The au believes that promoting intra african trade will be an essential factor to achieve sustainable economic development, to generate employment and effectively integrate the african continent in to the global economy. Intraregional trade flows and volumes fluctuating import growth perhaps the most distinguishing feature of the period between 1980 and 1992 are. The main objective of the action plan for boosting intra african trade is to reach 25% of the intra african trade currently, is 10% % through the regional integration. How can intra african trade be exploited in order to improve economic productivity, especially industrial activity.
The need to enhance intra african trade among african countries led to the formation of the eaccomesasadc east african community. Existing literature according to unctad 2008 report on economic development in africa, intra regional trade has never been an important source of trade for africa, accounting for only 8 percent of total exports in 2006. The promotion of intra african trade is the first pillar of the banks fifth strategic plan, informed by the view that intra african trade offers tremendous potential as a mitigant against adverse external shocks and global volatility. The strategic emphasis on intraafrican trade adopted by the bank and the african union provides the opportunity to foster the process of africas industrialization and eventually set the region on an export diversification path there is the increasing attention to the blue economy with its potential to promote intraregional trade. East african community secretariat, arusha, tanzania, 23rd march, 2018.
The fact that some of these countries are important in terms of regional gdp suggests that removing obstacles may help expanding intraafrican trade and, hence, initiate the growth spillovers. The 2012 boosting intra african trade biat action plan was designed by the african union commission, with support of the eca, to address the constraints to intra african trade through identifying a number of key programmes and activities under seven clusters. Action plan for boosting intraafrican trade fenglish. The international monetary fund predicts that this growth will only acceleratereaching around 5. Unable to tax land, which had little value, african states had to rely on trade taxes for revenue. The finding that trade among some african countries is too low implies that there are obstacles to such a trade. Official intra african trade is still relatively low and african. Intra african trade is currently estimated at 11 percent of global african trade. Although intra african trade is not a panacea for development, it is quite important.
It provides significant opportunity for countries to sell goods and services in other foreign lands and import the things it has in less abundance. It enables member states to use local currencies in their intra comesa trade. While international trade agreements such as african growth and opportunity act agoa and the recently announced economic partnership. Trade is widely accepted as an important engine of economic growth and development. It examines the situation from historical and cultural perspectives, and how these drivers inhibit or potentially enhance intraafrican relations. Intra african trade how is intra african trade abbreviated. While international trade agreements such as african growth and opportunity act agoa and the recently announced economic partnership agreement between the european union and southern africa are positive for the continent and should.