Afreximbank Report: Intra-African Trade Now 14.9% of Total African Trade, Grew by 3.2% in 2023

Intra-African trade represented 14.9 per cent of total African trade in 2023, which was an improvement over 13.6 per cent recorded in the previous year.

This was stated in the African Export and Import Bank’s (Afreximbank) African Trade Report 2024 with the theme “Climate Implications of the AfCFTA Implementation.”

It said: “Intra-African trade grew by 3.2 percent in 2023, slowing significantly from 10.9 per cent growth in 2022.

“Still, despite slow global growth and macroeconomic challenges experienced by several countries, intra-African trade displayed remarkable resilience in 2023, accounting for about 14.9 percent of total African trade, an improvement over 13.6 percent the previous year.

“This resilience followed concerted efforts on the continent, including the ongoing implementation of the AfCFTA, aimed at bolstering intra-African trade.”

The report, however, added that “with intra-African trade of 14.9 per cent, it, however, remains relatively low compared with other regions of the world.”

The report also projected that growth in Africa is expected to increase marginally to 3.5 per cent in 2024, from 3.2 per cent it recorded in 2023. 

Other major highlights of the report, which was released on Monday, July 1, showed that foreign exchange held on the continent expanded by 2.6 per cent year-on-year to $411.9 billion in 2023 while merchandise trade contracted by 6.3 per cent to $1.3 trillion in 2023.

The report also projected that Africa’s export would grow at the rate of 5.3 per cent in 2024 while import would rebound at 4.4 per cent in 2024.

According to report, “this growth performance reflects several factors, including weather shocks, the general global economic slowdown, domestic supply bottlenecks, high costs of living that constrained consumption expenditure growth, debt accumulation and repayment burdens, high interest rates and cost of finance that contributed to narrowing the fiscal space, and heightening political instability and domestic and intra-regional conflicts in some parts of the region.

“The performance of the region also reflected output deceleration in the region’s three largest economies, including Egypt, Nigeria, and South Africa.

“Nevertheless, despite slower growth in the region in line with declining global growth trends, output on the African continent expanded above the world average reflecting the continent’s continuous resilience.”

The report also said that the effects of the Ukraine crisis and by the Gaza-Israel conflict dampened Africa’s trade prospects as “merchandise trade on the continent, after an impressive growth of 15.9 per cent to reach $1.4 trillion in 2022 from $1.2 trillion in 2021, was significantly affected, contracting by 6.3 per cent to $1.3 trillion in 2023.”

Furthermore, the report stated that despite the challenging global environment, high commodity prices, particularly of crude oil, positively impacted export receipts and balance[1]of-payments, which reversed the downward trajectory of Africa’s reserves position.

“Accordingly, foreign exchange holdings on the continent recovered to expand at an estimated 2.6 per cent year-on-year to $411.9 billion in 2023, compared to a contraction of 2.3 per cent year-on-year to $401.3 billion in 2022.

The report also showed large untapped potential in intra-African trade in terms of products and across sub-regions.

Products exhibiting the greatest potential for trade among African nations, according to the report, included machinery, electricity, motor vehicles and parts, food products, minerals, beauty products, chemicals, plastic and rubber, ferrous metals, pearls and precious stones, and fertilisers.

Moreover, Southern Africa emerged as the sub-region with the most substantial export potential, followed by Eastern Africa, Western Africa, Northern African, and Central Africa.

“At the country level, South Africa, with a well-diversified economy, accounted for 20.4 per cent of total intra-African trade in 2023.

“This is reflected in the consolidated performance of Southern Africa as the highest regional contributor to intra[1]African trade, representing 41.1 per cent of total intra-African trade,” it said.

According to the report, amidst sluggish economic activity in developed economies the continent’s growth prospects could be dampened in the short term, though geographical diversification of its trading partners and growing South-South trade could mitigate these risks. 

“Estimates suggest Africa’s exports will grow faster than those of any other region, at a rate of 5.3 per cent in 2024, up from 3.1 per cent in 2023.

“The same estimates project imports rebounding at 4.4 per cent in 2024, after contracting by 2.4 per cent in 2023,” it said.

The report said that the recovery of African trade is expected to be driven by a combination of factors, including continuous dynamics in the commodity market, particularly the oil market, with oil prices expected to remain high.

Dike Onwuamaeze

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