RMB's intra-African trade forecast

In a bid to stimulate sustainable economic development and integration across the continent, the African Development Bank released an Economic Outlook report in May 2017 emphasizing the pivotal role of trade among African nations. The report highlighted that between 2000 and 2014, intra-regional trade in Africa grew from 10% to 16%, showcasing a promising trajectory. To delve deeper into the significance of intra-African trade for Africa's economic growth, Suresh Chaitu, the Sector Director for Banks and FDIs at Rand Merchant Bank, shared insights in a recent interview with CNBC Africa. Chaitu underscored the critical importance of fostering intra-regional trade, stating that it is the key to unlocking Africa's growth potential. Despite witnessing a steady increase to approximately 18%, Chaitu stressed that this figure pales in comparison to other global markets where intra-regional trade exceeds 50%. To fully capitalize on Africa's development prospects, job creation, GDP growth, and leveraging the trade capabilities of landlocked countries, accelerating the pace of intra-African trade is imperative. One of the impediments to ramping up manufacturing, a cornerstone for intra-regional trade, lies in historical dependence on commodity exports, particularly during the era of high oil prices. Chaitu highlighted the urgent need for economic diversification as commodity prices have significantly plummeted from previous peaks. Building robust road infrastructure and ensuring reliable electricity supply are essential prerequisites to nurturing manufacturing industries. Multilateral agencies such as the African Development Bank and the IFC are actively engaged in supporting connectivity initiatives to facilitate efficient shipment of goods and tackle trade barriers, including bureaucratic hurdles. To expedite progress, governments must not only invest in infrastructure but also streamline trade regulations and harmonize tariffs to enhance inter-regional trade flows. Despite the resounding call to shift focus from aid to trade, there remains a gap in translating discourse into action. Chaitu noted that while East Africa has made commendable strides in promoting intra-regional trade by standardizing tariffs and duties, there is a need for other African regions to emulate this success story. The collective effort to bolster intra-African trade hinges on bridging the gap between rhetoric and implementation, with proactive measures required to actualize the vision of trade-driven economic growth across the continent.