Mon. Jul 15th, 2024

The African share of global trade remained at less than 3 per cent, driven largely by merchandise trade, an indicator that African countries continue to trade with the rest of the world more than among themselves, according to a new report on Assessment of progress on regional integration in Africa by the Economic Commission for Africa (ECA).

The report was presented by Stephen Karingi, ECA Director, Regional Integration and Trade Division to experts ahead of the 4-5 March ministerial segment of the Conference of Ministers of Finance, Planning and Economic Development (COM2024). The report shows Africa’s regional integration agenda is progressing, albeit slowly. Furthermore, despite progress in monetary and financial integration, member states have not met the macroeconomic convergence criteria.

In addition, infrastructure development through the Programme for Infrastructure Development in Africa achieved mixed results. While roads and ICT advanced, rail transport and energy infrastructure progressed little. Infrastructure financing remains a challenge.

The report indicates that there has been some progress in the fulfilment of the first 10-year implementation plan (2014–2023) of Agenda 2063: The Africa We Want, of the African Union, including the adoption of the Agreement Establishing the African Continental Free Trade Area and the creation of the Single African Air Transport Market.

Progress in other areas crucial to the success of the Agreement Establishing the African Continental Free Trade Area, such as the ratification of the Protocol to the Treaty Establishing the African Economic Community relating to Free Movement of Persons, Right of Residence and Right of Establishment, and fostering peace, good governance and security, has been less encouraging.

“The rising number of unconstitutional changes of Government highlights the ongoing challenges afflicting African countries, including weak governance, persistent poverty and limited employment opportunities,” said Mr. Karingi adding that the second 10-year implementation plan of Agenda 2063 will need to address those challenges directly.

“States should continue to take the necessary measures to ensure that the regulatory environment is conducive to the mobilization of sustainable financing of infrastructure by the private sector,” he added.

Regional integration he said, remains critical in African efforts to achieve productive and sustainable development.

“The effective implementation of the Agreement will determine the extent to which the continent can derive the benefits of free markets and trade integration for the overall benefit of the people on the African continent,” noted Karingi.

Some of the key areas highlighted in the report on regional integration include:

Trade Integration

Despite trade under the Agreement Establishing the African Continental Free Trade Area having officially started on 1 January 2021, the envisaged changes in intra-African trade are yet to appear. Intra-African trade as a share of global trade declined from 14.5 per cent in 2021 to 13.7 per cent in 2022. 

Over the same period, intra-African exports declined as a percentage of total exports from 18.22 per cent to 17.89 per cent, and intra-African imports declined from 12.81 per cent to 12.09 per cent.

Monetary and financial integration

Of the primary criteria, the inflation criterion was met the least in 2022. Inflation remained elevated in many African countries in 2023: the African average was 18.5 per cent, and in 19 countries inflation was above 10 per cent. General government gross debt in 2023 averaged 65.2 per cent of GDP for Africa, compared with the 2022 average of 64.6 per cent.

Single African Air Transport Market

Currently, 36 members of the African Union, accounting for 89 per cent of the intra-African air transport market, have joined the Market. The Market is expected to increase the frequency of flights along existing air routes by 27 per cent and allow for gains through economies of scale of about $500 million from passenger fares, free competition, the opening of new commercial routes, environmental protection and the development of the private sector in civil aviation.

Information and communications technology

Africa has not performed well in bridging the gender digital divide: in 2023, 32 per cent of the female population used the Internet compared with 42 per cent of the male population, against a global average of 65 per cent of females and 70 per cent of males.

Energy

The proportion of the world’s population without access to electricity residing in Africa rose from 74 per cent before the COVID-19 pandemic to 77 per cent in 2020. 39 African countries can provide cheap and reliable energy to their populations by using renewable sources, including green hydrogen production.

Infrastructure financing

Africa still faces, a massive annual infrastructure financing gap estimated between $130 and $170 billion. Other innovative financing instruments include blended finance, green, social and sustainability-linked bonds, and debt-for-nature swaps.

The report recommends that the second 10-year implementation plan of Agenda 2063 should address those challenges directly. Aspiration one of the second 10-year implementation plan will be aimed at having every member of the African Union achieve at least middle-income status by 2034.  The second 10-year implementation plan is being finalized in a volatile global economic context.

Distributed by APO Group on behalf of United Nations Economic Commission for Africa (ECA).

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