The African Export-Import Bank (Afreximbank) has unveiled its 2023 edition of the African Trade Report (2023ATR).
The report, which was unveiled at the bank’s 30th Anniversary celebration and yearly general meeting held in Accra, Ghana examines trade and economic developments in Africa and other parts of the world in 2022, a period during which the world economy witnessed a sharp synchronised global deceleration on account of a confluence of overlapping global crises including the lingering effects of COVID-19.
The fallout of the challenges within these periods amplified the challenges of globalisation where trade is dominated by manufactured products
In addition, the limitations of globalisation of value chains came to the fore during the pandemic downturn where countries could not afford the critical goods and products at a time of greatest needs.
It was in the context of these developments that the 2023 African Trade Report focused on ‘Export Manufacturing and Regional Value Chains in Africa Under a New World Order’.
The report highlights the fact that a combination of supply chain disruptions, trade restrictions, heightening global tensions, and tightening monetary policy in response to record-high inflation, contributed to major shifts in investor sentiments and led to steep increases in commodity prices during the first half of the year
According to report, it further reaffirms that African exports are characterised by very few manufactured exports, which are concentrated in a limited number of countries, driven by a few sectors, and have limited export market.
However, it noted that Intra-African trade, which has been given a boost through the implementation of the African Continental Free Trade Agreement (AfCFTA), is clearly set to redefine Africa’s economic fortunes for the future.
The report also reaffirmed the belief that by lowering barriers to trade in goods and services, the agreement is providing great incentives for those looking to do business across the continent and reduce reliance on the global value chains while setting a new direction for the development of regional value chains.
It further underscored the relevance of the AfCFTA in facilitating integration and accelerating industrialization and structural transformation across African countries. It buttresses the justification of the AfCFTA’s ambitious programme, on account of optimizing the potential gains from full market access – and highlights that the AfCFTA could make a significant contribution towards defragmentation of Africa.
Accordingly, to achieve export potentials and develop regional/global value chains, African countries are encouraged to develop their manufacturing sector to accelerate the process of structural transformation.
“It is therefore essential to promote the expansion of investment, both domestic and foreign, create the appropriate conditions to benefit from the potential positive effects of FDI, address all forms of trade barriers both tariff and non-tariff, and implement friendly industrial policies to catalyze the development of large and more efficient production base.
“Limiting supply chain networks to allies and friendly countries, is a risk to global growth, as it calls for unwinding the global supply chains, but at the same time an opportunity for Africa – which has been largely marginalised from the global value chains by integrating them exclusively as providers of raw materials and natural resources.
“The AfCFTA which entered into force in January 2021 has been touted as a game changer because it has the potential to increase and shift the composition of foreign direct investment to accelerate the process of industrialization and structural transformation of African economies,” it added.
