President Donald Trump’s seesawing tariff threats and retaliations from across the globe have jolted markets, raised fears of an economic slowdown and threatened to set off a series of price crises.
For many, the damage could be broader. A protracted trade war could reinforce the unfair trading pattern that brought about the poverty of resource-rich regions and increased the prosperity of the global north. For Africa to close the current gap and become less depend on China, Europe and other regions through trade, there needs to be significant investments in processing to increase value addition as well as physical infrastructures such as regional rail systems and road networks. The emerging trade war makes the routes a necessary option for protecting indigenous industries, saving jobs and increasing prosperity.
The African Export-Import Bank (Afreximbank), in a 2024 report, believes this approach as encapsulated in the African Continental Free Trade Area (AfCFTA) is important for reversing the sad reality of intra-Africa trade. The current regression to protectionism, which is sweeping across America, Europe and Asia, is an acid test of Africa’s readiness to fully operationalise AfCFTA, which Afreximbank said would increase inter-African trade by 33 per cent. Sadly, five years into its official take-off, trade coordination among African countries remains in tatters.
Without a regional deal, the ratio of trade among African countries expanded to the total trade value of the continent increased from 10 per cent to 16 per cent between 2000 and 2014 (14 years), a study by the African Development Bank (AfDB) revealed.
In the first half of last year, about five years into the gradual implementation of the supposed game-changer AfCFTA, the share of intra-African trade to its total trade value was 12 per cent, according to WTO economist, Coleman Nee. The figure, ironically, was four percentage points behind the level it was in 2014 when AfCFTA (which Nee attributed the one per cent growth recorded last) was still in the work.
This is startlingly poor compared with other regions. From 2015 to 2017, Trade among Asian, European and American countries accounted for 47 per cent, 61 per cent and 67 per cent (respectively) of the total trade values of the regions, data by the UN Trade and Development (UTAD) discloses. Then, Africa was kneecapped to 15.2 per cent by poor connectivity and low value addition.
From 2000 to 2017, Africa’s imports from outside the continent made up 80 per cent and 90 per cent of its total imports. Only Oceania has recorded such high exposure to external market risk.
The biggest economies in Africa, who should be driving intra-trade, are still outward-oriented. Latest trade statistics, for instance, suggests that Nigeria is rather consolidating its trade relations with Asia and Europe as opposed to cultivating partners in the continent where it plays a big brother role. As at last year, there was no African country among its top trading partners, which include Spain, China, the United States, France, the Netherlands, Italy, India and Canada.
Ironically, the country’s total imports from the top 10 African import trading partners in the third quarter of last year was a mere 13 per cent of its imports from China, the top import partner.
With European and Asian manufacturers jostling to expand their reach in the region in replacement of the United States multi-billion dollar market, the depressing intra-Africa trade could even worsen in the coming months or years.
Some of the manufacturers are already contemplating the option of establishing manufacturing outposts in the United States to reduce tariff shocks and retain the huge market. But before they fully recalibrate their operations, experts have said, they would need new markets to sustain their current manufacturing operations, a possibility that means increasing their shares in African markets. This comes at a cost to the campaign for expanded intra-African trade to support faster growth and create more jobs – the economic rationalisation of AfCFTA.
According to the team, headed by Dr Yemi Kale, robust regional infrastructure investment would break the trade ties around Europe, America and Asia.
“Increasing intra-African trade is not just about economics—it is about resilience, self-sufficiency and sustainable growth. Currently, Africa trades more with the rest of the world than with itself, leaving economies vulnerable to external shocks, currency fluctuations and supply chain disruptions. Africa’s trade patterns raise fundamental questions: Can the continent boost intra-African trade by aligning key imports with the main exports of other African countries? Are African nations importing what their neighbours export or does the current structure reinforce external dependence?” Kale asked in a post validating the position of Afreximbank.
The pains inflicted by Africa’s dependency cycle could worsen in an era of intense trade war between the United States, Europe and China. But as Afreximbank canvassed, only deliberate national and regional policies that prioritise commodity processing, value addition and physical infrastructure will give the continent the much-needed edge.
