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BENEFITS OF INTRA AFRICA TRADE

By Jereaghogho Efeturi – Ukusare

It is no surprise that the various people from all corners of the continent of Africa had trade relations dating back over a thousand years ago. Notable among these were the Berbers of North Africa who had trade relations with the people of West Africa and the Nile valley, just as the West Africans traded with the people of the Nile valley as well. While stating the obvious historical fact, it cannot be overemphasised that the years of intra Africa trade dates back several centuries even before Christ. Today, the trade relations among African countries stand at 18 percent. In comparison with what is obtainable in Europe, America and Asia, this figure is a sign of very low trade volume among African states.

Extra Africa trade has continually declined since 2006. Trade relations with America has declined 66 percent while trade with Europe has declined by 5 percent. In comparison to Africa, intra Europe trade is much higher and at the moment, stands at 69 percent while intra Asia is at 59 percent and intra North America is at 45 percent. This gives a clear picture of the level of trade among African countries. Considering the trade history of the continent, one would expect that by the turn of the nineteenth century, the volume of trade among African countries would have been very high.

Factors responsible for this include: poor infrastructure, as African countries lack good and existing rail lines that could enhance cross border trade and at the same time lack good roads that could substitute. Lack of direct flights to most African destinations from within Africa is another mitigating factor while the influence of European, Asian and American interests has remained constant for centuries.

When recently the South African President, Cyril Ramaphosa visited the Nigerian President, Muhammadu Buhari, to convince the Nigerian president on the importance of his country (Nigeria) joining the continental Free Trade Zone, the latter objected making reference to local industries that must be protected. While the importance of the protection of local industries cannot be over stated, it is also important for local economies to feel the impact of direct investments by foreign organisations of African origin. This will make for robust competition while forcing the improvement in the quality of local products. It is therefore important for African States to take advantage of their proximity and boost the volume of intra Africa trade which comes with its benefits.

The benefits of improved intra Africa trade are numerous, dovetailing into political stability across the continent. One of the benefits of trade among African Countries is reduced or the near non existence of tariffs. The AfCFTA (Africa Continental Free Trade Area – Africa’s largest free trade zone) is a typical example of near non existence of tariffs agreement. AfCFTA cuts tariffs by 90 percent and this is obviously aimed at enhancing trade relations among African States. Another benefit is the fact that States within the continent will witness an unprecedented level of economic cooperation. Direct investments into the various economies will boost GDP of Member States which will also witness increased volume of local manufacturing and production. This is a welcomed initiative that is expected to be embraced by all African Countries.

Intra European trade ranks highest in the world and has over the years been highly beneficial to all European Union Member States. Some of the world’s highest Gross Domestic Products could be found in Europe. The single currency, the Euro, was birthed to enhance intra continental trade. African countries could through the African regional organisation, the African Union, have a single currency which will facilitate trade among African countries. In all of these, one fact is clear. It is the fact that African countries stand to benefit immensely from a well organised intra Africa trade relations.

The proper implementation and full involvement of African States in the AfCFTA will propel the prosperity of the African continent and this would make Africa achieve a near 100% intra Africa trade to the benefit of the people and States of the entire continent.

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