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Luke Muller - Africa’s share of global trade is growing

Trade between all countries in 2022 totalled approximately $31 trillion. The total value can be separated into $24.2 trillion worth of goods and $6.8 trillion worth of services, according to World Trade Organisation statistics. Goods dominate global trade and comprise all manufactured, fuel, mining, agricultural, and other products.

The collective countries that make up Europe top the list for exports and imports by value, followed by Asia, and North America. All African countries only contribute to 2.7% of global exports by value, but it is worth noting that this is an increase of 0.3% since 2003. WTO data (recorded since 1948) indicates that this is the first time that Africa’s share of exports has ever increased. There has previously been a steady decline in Africa’s share which started from 7.3% in 1948.

The downward trend has reversed and there are a few reasons to expect Africa’s role in global trade to expand even further in coming decades. Continued urbanisation will allow for labour specialisation, and this combined with steady population growth will lead to greater goods production and trade between urban centres. If the aim to gradually create an African Continental Free Trade Area Agreement (AfCFTA) is even partially realised, this will further expand the continent’s trade opportunities. Many African countries are aiming to gradually lower tariff barriers, natural trade barriers, and other non-tariff barriers with neighbouring countries and regional economic communities. South Africa’s share of global imports and exports has remained steady at 0.5% since 2003 but there are substantial possibilities to boost intra-African trade with the correct policies and infrastructure.

Manufacturing is a vital component of modern trade. Manufactured goods represent the largest share of goods exports (63%) followed by fuels and mining products (21%) agricultural products (10%) and other goods including gold, arms and ammunition (6%). Container shipping and the trade of manufactured goods go hand in hand. The number of 20-foot equivalent units (TEUs) handled in ports around the world has continued to show steady growth and will soon reach over 900 million TEUs. The world’s busiest container ports help to service manufacturing hubs, this outlines the importance of sources and the diversification of trade partners could help to mitigate against trade restrictions in the long-term. efficient, high-capacity ports, to enable the trade of value-added goods. By addressing bottlenecks in the ports and encouraging regional trade, African countries can tap into the global demand for manufactured goods.

There are threats to Africa’s trade growth, especially trade restrictions. For instance, the European Union’s Carbon Border Adjustment Mechanism (CBAM) targets specific goods that are deemed too carbon intensive. Given that most developing nations are relying on fossil fuels as their primary source of energy, any trade restrictions targeting CO₂ will ultimately lower trade from developing regions. All traded goods have a carbon footprint and could potentially be taxed, but the short-term objective of CBAM is to target subjectively selected goods including iron, steel, aluminium, plastics and organic chemicals. Continued investment in renewable energy sources and the diversification of trade partners could help to mitigate against trade restrictions in the long-term.

The odds are in Africa’s favour for increasing its share of global trade in the coming decades, although this will require proactive measures by African industries and governments. Africa can move away from predominantly exporting resources and increase the sophistication and value addition of export products by putting manufacturing, and a stable, enabling environment for industries at the forefront of priorities. Africa’s share of global trade is already growing, and that trend is expected to continue.

WTO: World Trade Statistical Review 2023
UNCTAD: Handbook of statistics 2023: Maritime transport indicators
UN: Review of Maritime Transport 2023

 Luke Muller Africas share of global trade is growing.PNG
 Luke Muller Africas share of global trade is growing.pdf

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