Intra-Africa cross border trade hailed
INFORMAL cross-border trade (ICBT) contribution to Gross Domestic Product (GDP) is hardly recognised despite being a major source of income, African Export–Import Bank (Afreximbank) president, Benedict Oramah.
Afreximbank in its annual African Trade Report (ATR) which examined trade and economic developments in Africa in 2019, indicated that the period was dominated by trade wars and escalating tariffs that resulted in a sharp deceleration of global trade growth.
This has been compounded by Covid-19, and as a result, following a fall of 2.8 percent last year, global trade is expected to shrink by 9.2 percent in 2020.
Commenting on the report, Professor Oramah, said: "Even though ICBP accounts for significant proportion of domestic absorption and has become a major source of income for consumption smoothing, its contribution to Gross Domestic Product is hardly recognised."
The ATR conducted an extensive study of ICBT, the first attempt at measuring in a detailed manner the size and composition of informal trade.
The report highlighted the importance of ICBT for generating employment and income despite regional variations.
The report estimates that it serves as a source of income for about 43 percent of Africa’s population and is dominated by women.
"In Southern Africa (the SADC block), female traders account for about 70 percent of ICBT. In West Africa, food and agriculture products accounted for 30 percent of intra-regional trade," said the report.
According to the report, Africa’s merchandise trade in the period January to August contracted by 12 percent compared to same period last year, with April and May emerging as the period witnessing the largest contractions.
It indicated that the outlook for 2021 was positive and Africa’s trade was ex
pected to rebound strongly in 2021 as global economic activity picked up and demand for African exports increases.
"The share of Africa’s exports to Asia increased to 30.79 percent in 2019 while the EU’s share decreased to 24.6.
"China and India have been the main drivers of the rising trade relationships between Africa and Asia, with China and India accounting for 27 percent of Africa’s total merchandise exports in 2019," the report said.