Sub-Saharan Africa could reap $35bn annually from trade facilitation and infrastructure investments
The International Trade Centre (ITC) today announced the findings of a major analysis of sub-Saharan Africa’s trade potential, which shows that the region could boost its annual GDP by US $15 billion if time spent in customs clearance is cut by 50%. Another US $20 billion could be added to the economies of sub-Saharan Africa each year by improving transport infrastructure, thereby getting goods to port in half the time it currently takes. If both sets of changes were implemented, the combined effect would be even larger.
‘Africa’s Trade Potential: Export Opportunities in Growth Markets’ looks at how sub-Saharan Africa can achieve greater sustainability in export revenues by increasing its exports to growth markets in Asia and Africa, and at the same time integrating deeper into value-chains, increasing the share of semi-processed and processed goods. The paper identifies strategic options and policies for sub-Saharan countries to maximise their trade-related growth up to 2025. It argues that this can be achieved by tapping into growth markets in Asia and Africa through investments in trade-related infrastructure and trade facilitation in Africa itself.
As the reorientation of exports from sub-Saharan Africa away from stagnating OECD economies towards Asia has already begun, ITC’s analysis shows that trade between Western Africa and Asia will grow at 14% each year in the next decade, far higher than predicted global trade growth. On current trends, however, this growth is driven by an increase in the exports of commodities, rather than value-added goods.
While in intra-regional African trade, processed goods comprise 46% of non-oil exports, only a meagre 5% of non-oil exports from sub-Saharan Africa to Asia are processed goods. To increase the exports of processed products to Asia, African countries need to attract Asian investment in manufacturing sectors.
‘This is the key challenge the continent is facing,’ said ITC’s Executive Director Patricia Francis.
‘There is an increase in the export of processed goods to Europe and within Africa. But while African markets are growing strongly, those in Europe are stagnating. To increase their share of value-added products to Asia, African countries must do more to attract and diversify investments— and not only in the extracting industries, but in manufacturing too.’
‘Africa’s Trade Potential: Export Opportunities in Growth Markets’ can be downloaded at www.intracen.org/Africa-trade-potentia-Export-opportunities-in-growth-markets/