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For decades, Africa's top economies have sought to build a new
brand of widespread durable prosperity and escape the painful
legacy of colonialism.
In this century, the continent has reckoned with an
over-reliance on raw materials, systemic poverty, and crumbling
ports, roads, and other transport links.
Nigeria, Egypt, South Africa and other top African economies are
trying to forge a new path by integrating companies and markets
across the continent. Boosting inter-African trade is seen as the
key to the continent's success in the 21st century.
In March 2018, 44 countries signed the African Continental Free
Trade Area Agreement (ACFTA). Once it's fully ratified, it will do
away with tariffs on 90% of goods, and remove obstacles to
cross-border African investment and sale of services. The dream is
a single market with an aggregate gross domestic product over $3
trillion.
Building more inter-African trade faces several challenges.
Trade deals signed with the US, the European Union, and China offer
appealing alternatives to trading with neighbors. Africa's export
economies countries are often controlled by foreign companies
shipping valuable resources to their home markets.
All five of African's richest economies -- Nigeria, Egypt, South
Africa, Algeria, and Ethiopia -- are heavily dependent on the
exploitation of natural resources. Only one of Nigeria's biggest
export markets is in Africa.
Top destinations Nigerian exports, 2018
India $10.3 billion (+34%)
Spain $5.9 billion (32%)
US $5.3 billion (-21%)
Netherlands $4.7 billion (+67%)
France $4.2 billion (+68%)
South Africa $3.5 billion (+115%)
UK $2.8 billion (+73%)
Indonesia $2.4 billion (+107%)
Germany $2.4 billion (+47%)
Sweden $2 billion (+92%)
Nigeria, a sprawling country of 203 million with a GDP of $1.1
trillion, has built an economy based on manufacturing, petroleum
production, banking and technology, agriculture, and film.
Its main obstacle to developing more intra-African trade isn't
tariffs, but rather tough licensing and standards requirements, and
the poor state of roads, ports and other trading infrastructure
throughout the continent.
Those things made it easier for China to take up the mantle of
developing trade with Africa, building markets for its own
manufactured goods whilst importing raw materials from the
continent.
China's top African trading partners, 2018, (global
ranking) total trade
#27 South Africa $41.8 billion
#32 Angola $27.8 billion
#45 Nigeria $15.4 billion
#50 Egypt $13.9 billion
#57 Algeria $9.1 billion
The country on the continent with the most integration in
markets is South Africa, which has dozens of domestic companies
focused on shipping to Africa.
South African export destinations, first 11 months,
2018
China $8 billion (+3%)
Germany $6.6 billion (+12.5%)
US $5.8 billion (-4%)
UK $4.3 billion (+38%)
Japan $4.2 billion (+8%)
India $4.1 billion (+10%)
Botswana $3.8 billion (+7.2%)
Namibia $3.3 billion (-0.3%)
Mozambique $3 billion (+13%)
Netherlands $2.8 billion (+13.5%)
South Africa's oldest market is its former colonial power, the
UK, and it benefits from broad diversity in its export base.
Britain's disentanglement from the European Union could further
boost its imports from South Africa.
Top South African exports to UK, first 11 months,
2018
Precious stones, pearls $1.8 billion (+34%)
Cars, trucks & parts $1 billion (+113%)
Edible fruits & nuts $499.2 million (+12%)
Electric machinery & parts $172.2 million (+20%)
Beverages, spirits & vinegar $141.5 million (+26%)
Ores, slags & ash $88.2 million (+15%)
Prepared vegetables, fruits, nuts $43.1 million (+35%)
Iron and steel $32.8 million (-8.6%)
Aluminium & articles of aluminium $32.8 million
(-3.7%)
Sugars & sugar confectionary $30.5 million (+717.8%)
That's a difficult act to replicate for a poor nation like
Senegal. The West African country of 15 million, exports more by
dollar value to Switzerland - much of that gold - than to any of
its African neighbors.
A report published last year by the African Export-Import Bank
acknowledged a "low level of intra-African trade" and argued that
"intra-African trade offers tremendous potential as a mitigant
against adverse external shocks and global volatility."
Top Senegal export destinations, 2018
Switzerland $533.9 million (+76%)
Mali $342.2 million (-5%)
India $299 million (+101%)
Spain $132.9 million (+29%)
Ivory Coast $127.8 million (-7%)
China $112.4 million (+11%)
Italy $102.8 million (+43%)
Guinea $93.6 million (+15%)
France $81.3 million (+10%)
The key for Senegal will be building new markets for its exports
of sustainable consumer products like its fish, edible preparations
and tobacco.
Top Senegal exports, 2018
Gold $555.8 million (+47%)
Fish & crustaceans $468.6 million (+19%)
Inorganic chemicals $284.9 million (+67%)
Fuel $234.9 million (+10.2%)
Salt, sulfur, lime, cement $206.4 million (+19%)
Ores, slags & ash $164.5 million (+13%)
Edible preparations $144.5 million (+6.8%)
Tobacco $95.4 million (-11%)
Oil seeds, grain, fruit $85.3 million (-0.3%)
Vegetables, roots & tubers $72.7 million (+10.4%)
In its report last year, the African Export-Import Bank said it
had "supported the growth of intra-regional trade through increased
financing of, and investment in, trade-supporting infrastructure to
expand light manufacturing industries" in order to "transform the
structure of African economies and diversify exports." Its success
will be key to building a healthier economy for Africa this
century.
Posted 18 March 2019 by John Miller, Guest Blogger
The Trade Numerologist is IHS Markit's unique weekly look at global trade by award-winning journalist John W. Miller, formerly of the Wall Street Journal, using proprietary numbers from IHS Markit's Global Trade Atlas database, the world's most complete and accurate set of trade numbers.
What topic would you like the Trade Numerologist to cover? Email tradenumerologist@gmail.com with comments and questions.
