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Can Africa Create a Free Trade Area?

Looking at the statistics behind the claims

Lionel Stanbrook
18 December 2019
                        

Africa’s share of global trade has not changed significantly in twenty years - from around 2.4% or thereabouts between the early 2000s and now. From habits forced by colonialism, African nations have historically relied too heavily on export income from primary commodities, including oil, minerals and raw materials which partly explain the continent’s disappointingly low level of intra-continental trade – about 15% compared to averages of 54% in the North America Free Trade Area, 70% within the European Union and 60% in Asia. 

Europeans and other developed countries are still benefiting from the exploitation of raw materials from the continent to stoke their economies and markets at the cost of Africa’s sustainable development. Continuing reliance on commodity exports sixty years after most African countries won their independence for the European powers is a bad sign, most simply demonstrated in tariffs. African businesses face far higher tariffs when exporting to other African countries (6.1%) than to countries outside Africa (less than 2%). 

Removing tariffs to trade between African countries to create a genuine free trade area seems fraught with problems, not the least of which is that most African economies are far too small to properly capitalise on the continental opportunities of scale that could exist in a 21st century global economy. Almost all African nations boast their national flagship airline. Of course they are all subsidised and only one – Ethiopian Airlines - makes any kind of profit. 

Sustainable economic development requires bigger markets, skilled workers, higher investment, and a large increase in manufacturing and services to encourage Africa to work more and trade more with itself. 

That’s why the emerging protectionist and nationalist policies, especially among industrial countries, will be so damaging to developing countries. It’s also w

 

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