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Business News of Tuesday, 11 January 2022

Source: ghanaiantimes.com.gh

Intra-African trade in industry, energy, mining others to increase by US$1 billion in value

Intra-African trade would increase over 50 percent for financial, business and communication service Intra-African trade would increase over 50 percent for financial, business and communication service

Intra-African trade among selected sectors under industry, energy, mining and agriculture are expected to increase by 30 percent during the implementation of the African Continental Free Trade Area agreement.

The projected 30 percent increase in intra-African trade in the selected sectors according to a study by African Export and Import Bank (Afrieximbank), translates into over US$1 billion increase in value of trade.

In the agriculture sector, sub-sectors to benefit most from the 30 percent intra-African trade increase are milk and dairy products, processed food, cereals and crops and sugar.

In industry, the sectors with the most potential are wood and paper products, chemical, rubber, plastic and pharmaceutical products, vehicles and transport equipment, metals, other manufactured products, and in energy and mining there is scope for refined oil exports.

“All of these sectors are forecast to experience an increase in intra-African trade in excess of 30 percent and not less than $1 billion,” the report by Afrieximbank noted.

The study added that, in terms of services trade, intra-African trade would increase by over 50 percent for financial, business and communication services, by around 50 percent for tourism and transport and by just over a third for health and education.

“Nonetheless, the opportunities for trade in both education and health services should not be ignored. Indeed, although more modest in relative terms as compared to the five priority sectors, gains would still be considered in both education and health and in fact gains would even be remarkable in many countries.

“It should also be emphasized that trade in health and education services within the AfCFTA framework, and along with the other five priority sectors, would help somewhat reducing the current heavy dependence of Africa on both exports to and imports from the rest of the world in health and education services, “it said.

“This has become a critical imperative following the COVID-19 crisis, which has further revealed the need for Africa to strengthen its own production and trade capacities in health and education. The two sectors are important vehicles for growth and development and Africa cannot afford to miss the trend towards increased digitalization, particularly affecting the education sector,” it further noted.

According to the World Bank, the AfCFTA would significantly boost African trade, particularly intra-regional trade in manufacturing.

The volume of total exports would increase by almost 29 percent by 2035. Intra-continental exports would increase by over 81 percent, while exports to non-African countries would rise by 19 percent.

Intra-AfCFTA exports to AfCFTA partners, the World Bank predicts, would rise speedily, especially for Cameroon, Egypt, Ghana, Morocco, and Tunisia, with exports doubling or even tripling.

Of the real sectors of the economy, the manufacturing sector is expected to gain the most with 62 percent increment in production activities followed by modest gains in the services sector and smaller gains in agriculture.

The African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion.

It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures, says the World Bank.