Edward Chisanga
Introduction
My opening statement is that, much as the establishment of the Africa continental free trade area (AfCFTA), in the past seven to eight years has been preoccupied with nothing but pomp and splendor, explosive admiration, self-approbation, and the towering presence of heads of state in Addis Ababa, those who present dissenting or different views about it must also be given attention to express their views about it. In this article, I do.
The Africa continental free trade area (AfCFTA) may be the world’s largest free trade area comprising 55 countries of the African union, a population of 1.3 billion people and a combined GDP of US$3.4 trillion. The opposite is true also, that Africa has the most infinitesimal intra-Africa trade in both proportion to the world as well as in actual size in dollar values. And, even before I end this article, my advice is that perhaps African leaders, in particular the private sector should spend more time on the supply side (The AfCFTA’s weakest link) than it does on the market side. If this is not done, Africa will continue to chase shadows and claims of the largest free trade area shrinking to hollowness.
The AfCFTA Secretary General rightly hits the nail on its head when he continues to urge member states to address infrastructure, production, human capital and industrialization in order for the private sector to effectively use the free market instrument. Almost eight years since its establishment in 2018, Africa’s excessive market access stands alone, anxiously waiting for its supply side partner. With market access yawning and starved for supply, intra-Africa trade expressed in exports still oscillates at the 15% mark of world trade while its developing Asian counterpart stands at 50%. In dollar values, Africa’s internal exports of all products stand at only $160.0 billion in comparison with $4.5 trillion for developing Asia. Developing Asia’s exports to the world total $9.0 trillion, which is fourteenfold that of Africa.
Infinitesimal intra-Africa trade
As the economy, intra-Africa trade is not growing robustly. Here, instead of using growth percentages, I use growth, or increases and decreases of intra-Africa trade in dollar values. It makes more sense than explaining in growth in percentages. In Figure 1 below, I show Africa’s annual increases or decreases, or if you want, growth of intra-Africa trade expressed in exports. I want to see how much the continent gets from intra-Africa trade each year expressed in dollar values instead of percentages. To do that, I subtract exports of $75,263 of 2017 from $88,175 million of 2018 to get $12,912 for 2018. Then, I subtract $88,175 of 2018 from $80,863 of 2019. For the $8,516 of 2024, I subtract $97,487 of 2023 from $106,003 of 2024 to get $8,516.
My findings are that (i) annual increases of intra-Africa exports are too small. For example, a rise in exports of $14.9 billion in 2021 is really nothing to write home about; (ii) in years 2019 and 2020, a drop in exports of $7.3 and $11.1 billion respectively is, again nothing; and finally, annual growth or increases have not been consistent. In years 2022, 2023 and 2024, exports dropped significantly from 2021. If I showed a graph as I do for GDP per capita later, intra-Africa trade increases and decreases would show largely a contracting trend.
Table 1: Annual increases and decreases of intra-Africa exports in $ millions
| Year |
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023
|
2024
|
| Intra-Africa exports in $millions |
75,263
|
88,175
|
80,863
|
69,682
|
84,661
|
97,034
|
97,487
|
106,003
|
| Annual increase/decrease |
|
12,912
|
-7,313
|
-11,181
|
14,979
|
12,373
|
453
|
8,516
|
Source: Unctadstat
Source: Unctadstat
Infinitesimal GDP per capita
Low GDP per capita in each African nation and at aggregate levels inhibit the continent from leveraging from regional and global trade. For purposes of the AfCFTA, I use GDP per capita instead of GDP growth because clearly, it’s the purchasing power manifested in the former that will determine how much each Africa country or private sector utilizes free market access. And I find that in the last two decades, 2005-2044, Africa’s aggregate GDP per capita has remained worrisomely too infinitesimal to carry trade on its shoulders. In 2005, it was only $ 1, 244. Between 2011 and 2014 it improved to an average of about $ 2,000. But it then shrank to $1, 895 in 2024.
This information is not shown in Table 1 below. Instead, Table 1 shows annual increases and decreases in GDP per capita. It means, instead of using the usual GDP per capita growth percentages, I have decided to use dollar values because they give a more realistic picture than percentages. When I say GDP per capita grew by 5%, the 1.3 billion Africans are all unlikely to understand. So, I subtract the first number of GDP per capita of $1,847 for year 2017 from $1,901 for year 2018 to get $54 increase in 2018. Then I subtract $1,901 from $1,932 to get $31; and I continue to do the same for the remaining numbers the first from the second until I get to 2024 by subtracting $1,898 from $1,895 to get minus $3. When I use dollar values, and say GDP per capita increased to $ 54, or decreased to $ minus 133 in 2020 shown in Table 1 below, people are likely to understand better than looking at percentages.
Table 1: Annual increase/decrease of Africa’s GDP per capita in US$
| Year |
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023
|
2024
|
| GDP per capita |
1,847
|
1,901
|
1,932
|
1,799
|
1,956
|
2,013
|
1,898
|
1,895
|
| Annual increase/Decrease |
|
54
|
31
|
-133
|
157
|
57
|
-115
|
-3
|
Source: Unctadstat
The main problem
Africa’s free market access partner will not be coming home soon. Dani Rodrik saw the problem and alerted African leaders and the world when he said, in 1997, “The marginalization of Africa in world trade is entirely due to the slow growth of African economies.” For many years, Africa’s economies, either as individual countries or aggregate have not been growing robustly enough to support regional or global trade. What I get is a set of annual increases and decreases from 2018 – 2024. As can be seen, these increases and decreases are very infinitesimal. They cannot help Africa to develop. They cannot help citizens to benefit from the AfCFTA. Unless these numbers increase substantially and robustly, purchasing power will remain infinitesimal. The largest increase was $ 157 in 2021. But that’s a figure no one can write home about. But look at the other increases in all the years. They’re very tiny. The other point is that there’re too many minus decreases.
So, it’s not this kind of GDP trending increases or decreases that can propel Africa’s regional or international trade. With infinitesimal GDP per capita, individual Africans will have no strong purchasing power to actively benefit from excessive free market access. To purchase, nations and their citizens need to have robust purchasing power or the ability to buy, which is often manifested in the size of GDP per capita. Unfortunately, in Africa, as per 2024 data, only two nations boast of above average GDP per capita. Seychelles has $16,131 followed by Mauritius with $12,223. South Africa has $6,205. Most nations’ GDP per capita are less than $1,000. But even GDP per capita of about $10,000 is not sufficient enough to be declared a robust symbol of purchasing power.
Zambia’s participation in intra-Africa trade
The good news is that it looks like Zambia is taking advantage of the AfCFTA’s free market access since its creation in 2018. As Figure 1 below shows, exports of non-copper products have risen from $1.5 billion in 2018 to almost double in 2024. Evidence is also that they dropped significantly between 2013 and 2016. It’s also a good confirmation that Zambia’s participation in intra-Africa focuses on exports of non-copper. But non-copper is not manufactured goods. Evidence in Figure 3 below shows that Zambia continues to export more primary commodities than manufactured goods in Africa as in the world. So, since AfCFTA was born, Zambia clings to its traditional way of doing business in Africa. It also means that there’s no major shift in Zambia private sector’s vision for the AfCFTA.
I agree with the Policy monitoring and research center (PMRC) when it says, “The implication of a small manufacturing sector for the AfCFTA is that there will be low trade in finished goods which will limit the scope for intra-regional trade.” Intra-Africa trade is skewed in favor of more exports of non-copper or non-traditional products.
Evidence that Zambia continues to export more primary commodities than manufactured goods is contained in Figure 3 below. The line above the other represents exports of primary commodities and the other, manufactured goods. The challenge is for Zambia’s private sector to match its towering and explosive public rhetoric with reality. Unless a major shift takes place, it will continue to chase shadows.
Conclusion
I conclude by going back to where I began. The problem of Africa’s limited participation in intra-Africa and global is due to Africa’s infinitesimal and slow growth of its economy. Hence, the focus of African nations, individually and at aggregate level, must be to grow economies robustly. Robustly simply means increasing productivity, through development of infrastructure, human capital with cognitive function, shifting mindset, attracting productive investment in manufacturing, or simply learning from emerging Asian nations, in particular Viet Nam, how it succeeded in developing its supply base, to enable it to overtake Africa in global exports of manufactured goods.
Sometimes I wonder what would happen if we arranged a debate, between African and Asian leaders to speak about their economic achievements. Viet Nam leaders will list exports of Electrical machinery, equipment: Machinery including computers: $74.2 billion, Footwear, Furniture, bedding, lighting, signs, prefabricated buildings, Clothing, accessories, Knit or crochet clothing, accessories, Plastics, plastic articles. All these totaled US$499.8 billion worth of exported products around the globe in 2024. What will each African leader, perhaps apart from South Africa list? Self-approbation and celebrating small economic wins.
