Africa export competitiveness report 2023 identifies constraints to the development of inter-African trade and possible solutions

Developed by the Arab Bank for Economic Development in Africa (BADEA) in partnership with the African Capacity Building Foundation (ACBF), the Institute for Competitiveness in India, and Shift Impact Africa Group, the Africa export competitiveness report 2023 is a comprehensive analysis of Africa's export potential, which aims at shedding light on the opportunities and challenges of the continent in the next years. It analyses the sectors with high growth potential, identifying emerging trends, offering actionable recommendations to unlock Africa's full export potential.

BADEA was established on 28th November 1973 pursuant to the resolution of the 6th Arab Summit Conference at Algiers, and began operations in March 1975. Since its establishment, the bank has been active in the promotion of Afro-Arab cooperation through a variety of operational modalities, including financing projects in both public and private sector for the development of Sub-Saharan African countries. With regard to the private sector, BADEA provides support to African businesses to seize export opportunities under the African Continental Free Trade Area (AfCFTA) and to compete globally.

The report notes that Africa trades more with Asia and Europe than with itself, calculating at 14.12% the level intra-Africa trade based on UNCTAD statistics. However, it admits that this share does not include cross-border informal trade, which has been growing more than formal trade in recent years and that in the absence of precise informal cross-border trade data, a comprehensive depiction of intra-African trade is not possible. The report also admits that the intra-African trade is systematically underreported and that its economic significance is underestimated, highlighting the lack of any permanent and continent-wide system for its monitoring and quantification in Africa. The main conclusion is that accurate informal cross-border trade data is crucial for understanding intra-African trade, as it helps in maximizing the potential benefits of the AfCFTA for inclusive growth.

On a quantitative perspective, the report points out that trade in services has witnessed a noteworthy surge in over the past few decades, despite the fact that trade in merchandise continues to dominate Africa’s international trade landscape.

The main factors for the low performance in intra-Africa trade are indicated in the existence of many trade barriers, the poor status of infrastructure, and high levels of corruption. Importantly, the study raises the importance of road infrastructure development as a key enabler for intra-Africa trade, underscoring the imperative for African countries to prioritize the establishment of robust policy frameworks and the development of essential infrastructure to bolster export competitiveness. Another key point is the adoption of policies for promoting the diversification of export portfolios, also by leveraging services, which play a vital role in enhancing African country's export competitiveness, concluding that a strong service export sector complements goods exports and can be a significant driver of economic growth and prosperity. The African Continental Free Trade Area (AfCFTA) is also indicated as a tool that can be leveraged for eliminating barriers that constrain intra-African trade. However, in order to see significant results in the AfCFTA implementation process, it will be necessary to ensure that African companies are equipped to confront the challenges and harness the opportunities that the AfCFTA poses by pooling resources, share best practices, and foster collaboration among African nations, regional economic communities, the private sector, and development partners.