African countries’ trade relationships with the rest of the world are more important than those within the continent, according to an assessment report by the UN Economic Commission for Africa (ECA).
The report, which covers the progress made in terms of regional integration in the context of the Covid-19 pandemic, was presented during the 39th ECA’s Committee of Experts, which kicked off on Wednesday in Addis Ababa, Ethiopia.
“The European Union,” says the report “holds the largest market share, accounting for 29.8 percent of total trade in 2018. The trend is however changing after Brexit and also due to increased trade between China and Africa”.
Stephen Karingi, Director of the Division of Regional Integration and Trade, ECA, while presenting the report’s findings, says Covid-19 has severely disrupted the implementation of regional integration initiatives, including the African Continental Free Trade Area (ZLEAC), due to the closure of national borders.
“Governance, peace and security issues continue to hamper the implementation of regional integration. Digitization is essential to maintain business competitiveness and enable effective participation in cross-border e-commerce,” says Karingi.
The report shows that in 2018, Africa accounted for only 2.6 percent of world trade, a slight increase from 0.2 percent, compared to 2017.
Intra-African trade grew to 16.1 percent in 2018 ($ 159.1 billion), up from 15.5 percent in 2017. Globally, production declined slightly to 3.6 percent in 2018, against 3.8 percent in 2017.
While progress continues to be made in pursuing the continent’s regional integration agenda in the eight Regional Economic Communities (RECs), challenges to achieving deeper integration remain. In particular, most of the RECs and Member States are struggling to make progress in the area of productive integration.
Stephen Karingi notes that before the Covid-19 pandemic, intra-African trade increased, but compared to other regions, this trade has remained low.
“Trade, the economic movement of people and services, infrastructure, governance, peace and security are the main pillars of regional integration,” he declares, adding that many countries are doing their best to implement ZLECA.
According to him, peace and security create environments conducive to the pursuit of regional integration and the achievement of broader continental development goals.
The report presents an assessment of the state of regional integration in Africa with particular emphasis on the progress made by the RECs in key dimensions of regional integration, including macroeconomic integration, productive integration, trade integration, integration of infrastructure, free movement of people and governance, peace and security.
In all the RECs, says Mr. Karingi, productive integration is the least performing dimension of regional integration.
“Most of the communities are lagging behind in terms of intra-regional exports and intermediate imports, and register a very low index of complementarity of trade in goods,” he explains, adding that productive integration is crucial in strengthening industrialization and trade.
According to the report, the Arab Maghreb Union (AMU) and the East African Community (EAC) lead the way in productive integration, with index scores of 0.449 and 0.434, respectively, while ECOWAS is the least integrated regional block in this area, with an index score of 0.220.
Despite the poor performance of the majority of the RECs in terms of productive integration, several initiatives are underway to improve the situation, some of which are supported by ECA.
The Economic Community of Central African States (ECCAS) and EAC are the best performing communities in terms of macroeconomic integration, with index scores of 0.684 and 0.660, respectively.
TE/fss/abj/APA