Standard Chartered Bank Plc, a financial institution with headquarters in London, United Kingdom, and strong presence in Africa, has said that the total exports from Africa will reach about $952 billion by 2035, from the current value of $310.083 billion (Q4, 2023), with the potential of being boosted further by about 29 percent due to the impact of African Continental Free Trade Agreement (AfCFTA). When fully implemented, AfCFTA has the potential to further boost trade by three percent annually from now until 2035. This was revealed in its ‘Future of Trade: Africa’ report which was released during the 2023 World Bank Group – IMF Annual Meetings that took place from October 9-15 in Marrakesh, Morocco.
In a statement accompanying the report, Standard Chartered Bank said, “Rising regional trade levels and greater connectivity will unlock high-growth corridors across Africa and beyond. Intra-Africa trade is expected to reach US$140bn by 2035, equating to 15 percent of Africa’s total exports.
“Africa’s corridors with some of the world’s most dynamic regions will grow faster than the global average of 4.3 percent. The East Africa-South Asia corridor is expected to emerge as the fastest-growing major corridor, at 7.1 percent per annum through to 2035. The Middle East-North Africa and the Middle East-East Africa corridors will also be substantial, with their combined trade volume expected to reach almost $200bn by 2035,” according to the bank.
With a stronghold of rich natural resources, the world’s largest free trade area and a 1.1-billion-person market, Africa, the second largest continent has the potential to forge a new development path, and harness the potential of its resources and people. However, the region faces several development challenges. One of these is the close-door policy of governments against each other. Conversely, countries like Kenya which became visa-free from January 2024; and before Kenya, countries like Rwanda, Benin, The Gambia and Seychelles which are visa-less for all African countries, show signs of solving this challenge. This development, which is one of the cardinal focuses of the African Union, will aid trade and tourism among African nations.
On the potentials of the AfCFTA, the Standard Chartered Bank said that the trade agreement could help overcome challenges of high costs of compliance and administration, by implementing common rules of origin, which grant all 54 AfCFTA members preferential trade access to each other’s markets, to the extent set out in the agreement. “Africa, however, still has barriers to overcome and to realise the full potential of its trade opportunities. Based on a survey conducted with over 100 of Africa’s business leaders, 63 percent respondents said complex and uncertain trade rules are one of the top challenges of intra-African trade. 53 percent of respondents noted that underdeveloped transportation infrastructure, especially bad road condition and network, is a key barrier. 51 percent cited ineffective trade facilitators as another hurdle, whilst 46 percent stated that limited and/or costly access to capital is a challenge.”
The bank said, about 90 percent of respondents believe the AfCFTA can address most of these challenges. In fact, immense progress has been noticed in this regard of tackling the challenges, with the AfCFTA taking steps to address barriers through various initiatives, such as a reporting mechanism to all member-nations and a guided trade initiative to accelerate trading amongst countries. The AfCFTA Guided Trade Initiative is a trade policy tool that African countries can leverage on to tackle trade barriers that have long prevented the continent from achieving economic development and prosperity. The world-wide embrace of Artificial Intelligence (AI) and other technologies, especially digitalisation, would definitely play an important role in bolstering intra-Africa trade.
The Standard Chartered Bank report revealed that adopting digital supply chain financing solutions could unlock $34 billion of export value in five key African markets by 2035 (Egypt, Ghana, Kenya, Nigeria and South Africa). Experts in the trade industry have noticed that improved trade in Africa has the potential of increasing employment generation and Africa’s growth potential. The African continent’s population is projected to reach 1.1 billion people by 2040 and will become the largest workforce globally. This huge workforce will be effectively used in trade value-chain by farming for export and agro-processing. Africa is also endowed with youthful age with some of them good in innovation and technology development. Government must challenge the youth to develop digital supply chain mechanisms.
Trade so much depends on infrastructure provision. The expectation of improved trade between African countries means that African countries, which are keen on benefitting from intra-African trade, must be ready to invest in transportation infrastructure. It is expected that the completion of Kano in Nigeria to Maradi in Niger Republic railroad, will boost trade relations between the two countries as well as create revenue for Nigeria. Efficient trade system in a nation has the potential of reducing relative poverty and alleviating abject or extreme poverty. Inter-African trade has been practised for many ages. It is a common practice to see Nigerian traders buying fish from Chad to be sold in Nigeria and traders from Ghana buying goods from Nigeria.
Why all these laudable plans may not materialise have been documented and must be worked on. Globally, average continental corruption is highest in Africa. Few countries have acceptable levels of corruption regimes. Corruption is a double-edged sword which depletes the financial and material assets of a country as well as discourages industry. It is not unlikely to see officers in some African countries against the smooth sail of trade. To fully benefit from trade in the nearest future in Africa, all African nations must have one common currency or at most three. This will make trading an easy task as language difference is a major barrier already. Is it not possible for all African citizens to be able to speak English and French, the two most popular languages in Africa?
African countries truly have the potential to increase their continental exports to other parts of the world to over $1.0 trillion, but this is tasking. It requires planning, discipline, hard-work, collaboration and sacrifice from the member nations. Some bordering countries like Nigeria and Benin will need to work together on common products to be able to meet international demand.
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