New ITC report: Insights to diversify trade in Africa
African policymakers are embarking on an ambitious regional integration effort. The African Continental Free Trade Agreement (AfCFTA) creates a first-of-its-kind common area for Africa’s trade competitiveness and development.
This agreement requires policymakers to align a wide range of complex and divergent trade strategies across the continent. To support this ambitious endeavour, the International Trade Centre (ITC) has launched a report that assesses Africa’s existing national and sub-regional trade strategies to identify common trends and opportunities in the ongoing AfCFTA negotiations.
ITC’s Diversifying Trade in Africa: New strategy approaches for the African Continental Free Trade Area examines 181 strategic African trade and development documents in ITC’s Trade Strategy Map database. To achieve robust regional integration, the report suggests that Africa should focus more on manufacturing and innovation sectors that can add value.
‘If not designed properly and used by the private sector, the African Continental Free Trade Agreement will foster little economic benefits. This is why investing in the ‘design phase’ will be essential for African policymakers to align often complex and even divergent national trade strategies across the continent,’ said ITC Executive Director Director Arancha González.
To define a common strategic vision for Africa, ITC’s new report suggests that AfCFTA negotiations take into account the following trends:
- Agriculture accounts for less than 20% of Africa’s GDP but more than 60% of the priority sectors in African trade strategies. Manufacturing and high value-added sectors are rarely prioritized both at the country and regional level.
- Overlapping sector priorities in national strategies, particularly for the agricultural sector, may require particular attention during AfCFTA negotiations.
- Close to 80% of existing trade strategies in Africa identify trade integration and regionalism as crucial policy areas, but just 10% of African strategies currently have a regional scope, which indicates there is space for regionalism to grow.
- Innovation is seldom featured as a priority in African trade competitiveness strategies, yet will be important for upgrading and diversification.
- Smaller nations in Africa can play a key role in building the African common market, as they tend to engage more in regional strategies.