Sadc nations and inter-Africa trade

Magreth Nunuhe Correspondent
South Africa and Namibia were Africa’s top contributors to intra-African trade in 2017, with a combined total trade in the continent around US$40 billion, according to the 2018 Afreximbank Trade Report released recently.

South Africa leads the pack with US$31,92 billion worth of trade, accounting for over 24,9 percent of intra-African trade, while Namibia with only a population of 2,4 million came in second place with total trade estimated at US$7,6 billion (5 percent) of intra-African trade.

Nigeria, which is arguably Africa’s biggest economy with a population estimated over 190 million was overtaken by Namibia, coming in third with its contribution in intra-trade valued at US$6,99 billion in 2017.

The African Continental Free Trade Area (AfCFTA), signed by African governments earlier in 2018 in Kigali, Rwanda, aims to create a single market for goods and services on the continent and to boost intra-African trade.

The trade report also indicates that overall, SADC nations dominated the top 10 rankings in contribution to African intra-trade, with the exception of Nigeria’s third place and Côte d’Ivoire in the fifth spot.

Zambia occupied fourth place, while eSwatini, Botswana, Zimbabwe, the Democratic Republic of Congo and Mozambique followed in sixth to tenth place, respectively.

According to Afreximbank, oil continued to account for the largest share of South Africa’s trade account with Africa during 2017, while export of mainly mineral products, machinery, chemicals and iron and steel products accounted for over 50 percent of its total exports towards the rest of the continent.

Namibia’s strong trade relationship with South Africa continued in 2017, with Namibia absorbing over 12 percent of South Africa’s exports to Africa and providing around 10 percent of South Africa’s imports from Africa.

“These important trade links are in part catalysed by the growth of Namibia’s precious minerals industry, which saw a 15 percent increase in rough diamond sales in 2017. The increase in diamond production was mainly due to the return to full production of a mining vessel that had undergone maintenance during the first half of 2016,” read the report.

Exports from Nigeria into Africa comprised mainly crude oil, which accounted for around 90 percent of export revenues, while its imports from the continent were more diversified, with fertiliser imports prominent among them.

Africa’s trade is still dominated by international trade, where the European Union accounted for 63 percent of total trade, 50 percent for North America and 52 percent for Asia in 2014.

This information is contained in the “Trade Finance in Africa Survey Report” published in September 2017 by the African Development Bank Group.

The report further revealed that intra-African trade only accounted for 15 percent of overall trade in 2014, with east and southern Africa leading with the highest share of between 18 and 19 percent. This is the reflection of the Common Market for Eastern and Southern Africa (COMESA) and Southern African Development Community’s (SADC) effective agenda in consolidating trade and development in Africa.

North Africa and Central Africa have the lowest share of the intra-African trade of 5,3 and 2,1 percent, respectively.

Namene Kalili, senior manager Research and Development at the FNB Group said that although African countries do not trade much with each other, trade was picking up as Africa’s economy is rebounding and becoming more non-resource based.

He noted that even the big commodity exporters such as South Africa, Nigeria and Botswana were diversifying their export base.

“When looking at Southern African Region, we see growth lifting, inflation going down, governments are borrowing less — the macros are looking good for Africa,” he said.

However, Kalili cautioned that when unpacking, some of the countries that have high concentrations in exports could be highly exposed to vulnerabilities. For example, he said 93 percent of Angola’s export revenue comes from oil and if the prices of oil come down, they will be highly exposed.

“We have seen that over the past three years when prices for oil came down from US$110 a barrel to US$30 a barrel,” he pointed out.

Similarly, 88 percent of Botswana’s revenue comes from diamonds, which could be impacted if prices for diamonds were to fall.

On the other hand, Kalili said that Namibia and South Africa’s export concentrations are a lot lower as they have gone into diversification.

He added that South Africa has diversified a lot into manufacturing, while Namibia focusses on different commodities, even though diamonds, its biggest export commodity accounts for 27 percent of the country’s revenue.

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