The African Export-Import Bank (Afreximbank) has released its African Trade Report 2024, revealing a modest increase in intra-African trade amid global economic headwinds. The report, titled “Climate Implications of the AfCFTA Implementation,” provides insights into the continent’s trade performance and economic outlook.
According to the report, intra-African trade represented 14.9% of total African trade in 2023, up from 13.6% in the previous year. This growth occurred despite a slowdown in the overall pace of intra-African trade expansion, which decelerated to 3.2% in 2023 from 10.9% in 2022.
“Despite slow global growth and macroeconomic challenges experienced by several countries, intra-African trade displayed remarkable resilience in 2023,” the report stated.
It attributed this resilience to “concerted efforts on the continent, including the ongoing implementation of the AfCFTA, aimed at bolstering intra-African trade.”
However, the report noted that at 14.9%, intra-African trade “remains relatively low compared with other regions of the world.”
The Afreximbank report projects a marginal increase in Africa’s economic growth to 3.5% in 2024, up from 3.2% in 2023. This growth forecast comes despite various challenges facing the continent, including weather shocks, global economic slowdown, domestic supply bottlenecks, high living costs, debt burdens, and political instability in some regions.
The report highlighted that Africa’s three largest economies – Egypt, Nigeria, and South Africa – experienced output deceleration. Nevertheless, the continent’s overall economic expansion remained above the world average, “reflecting the continent’s continuous resilience.”
In terms of trade performance, Africa’s merchandise trade contracted by 6.3% to $1.3 trillion in 2023, following an impressive growth of 15.9% to $1.4 trillion in 2022. The report cited the effects of the Ukraine crisis and the Gaza-Israel conflict as factors that dampened Africa’s trade prospects.
Despite global challenges, the report noted that high commodity prices, particularly crude oil, positively impacted export receipts and balance-of-payments. As a result, Africa’s foreign exchange holdings expanded by an estimated 2.6% year-on-year to $411.9 billion in 2023, reversing the previous year’s contraction.
Looking ahead, the report projects that Africa’s exports will grow at a rate of 5.3% in 2024, up from 3.1% in 2023. Imports are expected to rebound at 4.4% in 2024, following a 2.4% contraction in 2023.
“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,” the report stated.
The Afreximbank report also highlighted significant untapped potential in intra-African trade across various products and sub-regions. Products with the greatest potential for trade among African nations include machinery, electricity, motor vehicles and parts, food products, minerals, beauty products, chemicals, plastic and rubber, ferrous metals, pearls and precious stones, and fertilizers.
Southern Africa emerged as the sub-region with the most substantial export potential, followed by Eastern Africa, Western Africa, Northern Africa, and Central Africa. At the country level, South Africa accounted for 20.4% of total intra-African trade in 2023, reflecting its well-diversified economy.
The report underscores the importance of geographical diversification of trading partners and growing South-South trade as potential mitigating factors against risks from sluggish economic activity in developed economies.
As Africa continues to navigate global economic challenges, the Afreximbank report provides valuable insights into the continent’s trade dynamics and growth prospects, highlighting both progress and areas for further development in intra-African trade.
