A report on the assessment of progress on regional integration in Africa revealed that African nations trade more with countries outside the continent than each other. The African share of global trade remained at less than three percent as a result of the largely driven merchandise trade in 2023.
Despite the progress observed in the monetary and financial integration, the report showed that member states had not met the macroeconomic convergence criteria despite progress in regional integration.
The report says “The African share of global trade remained at less than three percent, driven largely by merchandise trade, an indicator that African countries continue to trade with the rest of the world more than among themselves”. It further noted that the anticipated improvements in trade between African countries had not materialized despite establishing the African Continental Free Trade Area agreement officially on January 1, 2021.
According to the report, “the proportion of intra-African trade relative to worldwide trade decreased from 14.5 percent in 2021 to 13.7 percent in 2022”.
The share of intra-African exports in this period fell from 18.22 percent to 17.89 percent. Also, the intra-African import value dropped from 12.81 percent to 12.09 percent. While progressive initiatives have been launched in the areas of roads and ICT, a pause has been placed on the rail transport and energy infrastructure due to a lack of sufficient finance.
ECA Director of Regional Integration and Trade Division Gives Insight
However, Stephen Karingi, the ECA Director of Regional Integration and Trade Division, added that “The rising number of unconstitutional changes of government highlights the ongoing challenges affecting African countries, including weak governance, persistent poverty, and limited employment opportunities”.
He further mentioned that the implementation of the agreement effectively is a determinant of the length at which the continent can benefit from the free markets and trade integration having the interest of the people on the African continent at heart.
To achieve this, pundits pushed for innovative financial mechanisms such as blended finance, bonds focused on environmental, social, and sustainability goals, and debt-for-nature swaps are being explored.
