Trade Transformation in Africa
Sub-Saharan Africa is a region that has been plagued with poor infrastructure for trade facilitation, weak export development programs, poorly funded trade institutions and lack of effective coordination among the key regional economic communities in order to advance intra-African trade which remained relatively poor at 15 percent in 2016 compared to intra-regional trade in other parts of the world.
Despite Africa’s enormous potential and opportunities for strong integration into the global market, the continent faces challenges that are primarily due to lack of political will to implement strategies that can enhance trade, poor funding of export promotion programs, and agencies thereby rendering those institutions incapacitated to deliver on their primary mandates of growing exports for the region, insufficient government support for small and medium sized enterprises (SMEs), lack of visibility for goods originating from the continent and low quality products thereby complicating the process of scaling regulatory compliance issues within and outside the region.
However, there seems to be a ray of hope in addressing some of these issues with African Export-Import Bank’s (Afreximbank) ongoing efforts and commitment to transform trade in Africa. Although the bank is traditionally a multilateral trade finance institution, it recently designed and launched a five-year strategic plan which focuses on improving regional and intra-African trade, supporting industrialization and export development, as well as increasing financial intervention for SMEs in the export supply chain segment to reduce the existing trade finance gap.
Afreximbank has commenced the implementation of this strategic plan through an array of initiatives. In order to pursue its intra-African trade agenda, during the bank’s recently held Annual General Meeting (AGM), it brought together a group of select intra-African trade champions such as Dangote group of Nigeria and Elsewedy of Egypt as well as other multinational companies operating in the region at a roundtable to discuss practical solutions to issues limiting trade within the continent.
Under the industrialization and export development program, it started initiatives such as: the Africa cocoa initiative (Africoin), a value addition process to de-commoditize cocoa and other agri-products, the fund for Africa export development (FunFed), an increased financing of logistics infrastructure such as shipping and cargo handling companies, the creation and funding of special economic zones and development of industrial parks across Africa. These industrial parks and special economic zones will expand Africa’s production base and offer investment opportunities in the manufacturing sector to both local entrepreneurs and foreign investors.
Also, the bank recognizes the complexity of these tasks; thus it is collaborating with all stakeholders and forming international alliances to facilitate global market access for Made in Africa products. For instance, Afreximbank newly engaged in a partnership arrangement with the World Trade Center Miami (WTCM), an organization that promotes two-way trade between the western hemisphere and other global markets, to provide market access into the Americas and consequently advance trade between Africa and the Americas. Hence, the WTCM has designed a specialized export development program for the continent to provide accelerated market integration for African businesses using various trade promotion platforms.
The key pillars of Afreximbank’s strategic framework encompasses all the critical areas of trade transformation program which include advocating for initiatives that would increase intra-regional trade, pushing for the harmonization of standards and customs procedures in the region, campaigning for value addition and de-commoditization as well as financing projects that will support structural trade transformation. With this bold and aggressive drive from Afreximbank, there is hope for Africa.
Kemi Arosanyin is an International Trade Development Specialist and Director for Africa Trade Expansion Program at the World Trade Center Miami. She writes, speaks, and advises on trade and investment in sub-Saharan Africa.