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Need for rise in global trade from Africa’s stand point


If you can walk into a supermarket and find Costa Rican bananas, Brazilian coffee, and a bottle of South African wine, you are experiencing the effects of international trade. International trade allows countries to expand their markets and access goods and services that may not otherwise be available domestically. The market holds a cut-throat environment, as a result of international trade. This ultimately results in more competitive pricing and brings home a cheaper product for the consumer.

Trade is the solution for long-term, sustainable economic growth, and development in Africa. Because trade is critical to sub-Saharan Africa’s economic future and to improving lives and livelihoods, the 8th Annual African Development and Opportunity Act (AGOA) Forum in Nairobi, Kenya from 4-6 August is an important venue for farming. of business opportunities.

Trade is critically important to economic growth. Right now, Africa accounts for about 2 percent of world trade, which is hard to believe when you think about all those tremendous resources – oil, diamonds, gold. Mention all agricultural products like coffee, tea, and cocoa – and to think that Africa still only accounts for 2 percent of world trade is unbelievable. But the power of trade is that if Africans increase their share of world trade by 2 to 3 percent, an increase of 1 percent would generate about $70 billion in additional income for Africa annually or nearly three times the total development aid that Africa receives from the world.

Beneficial Effects of International Trade

  • Benefits for International Expertise:

International trade enables a country to enjoy the benefits of international expertise at a comparable cost. Each country specializes in and exports goods that it can produce cheaper in exchange for what others can provide at a lower price.

  • Expanding The Market And Increasing Productivity:

It is argued that the productivity gains generated by the expansion of the market are the result of foreign trade. Improvements in productivity result from the greater division of labor, higher levels of mechanization, and greater innovation potential.

  • Helpful for High Growth Potential:

Foreign trade can also help a country’s development by allowing it to exchange domestic goods, saving low growth potential for foreign goods with high growth potential. It provides an opportunity for the import of capital goods and materials required for development purposes. Imports of machinery, transportation equipment, vehicles, power generation equipment, road construction machinery, medicines, chemicals, and other goods with high growth potential provide more benefits to developing countries.

  • Capital Formation:

Foreign trade helps in increasing capital formation. The ability to save as real income increases through more efficient resource allocation associated with international trade. Foreign trade also provides incentives for investment and thus increases the rate of capital formation.

Africa in the New Trade Environment

Sub-Saharan Africa represents only a small part of global production and trade, while more than half of the world’s poor are. To catch up with the rest of the world, the continent has no choice: it must reform to increase its supply capacity while better linking its production and trade to the global economy. If this happens, it will benefit from unlimited demand and innovation in the supply chain. Some progress has been made in the past decade, with the region’s exports and imports increasing rapidly. As most African economies rely heavily on trade for a large portion of national income, they will be more vulnerable to trade disruptions from external shocks, as evidenced by the recent COVID-19 pandemic. Africa in the New Business Environment: Market Access in Crisis Times provides a comprehensive, cutting-edge analysis by a team of renowned business economists that offers a strategy to strengthen Sub-Saharan Africa’s market accessibility in the current global environment.

African Continental Free Trade Area (AfCFTA).

AfCFTA launched in 2021 and it becomes an exciting game-changer. Currently, Africa contributes just 2% towards global trade. And only 17% of African exports are inter-continental, compared with 59% to Asia and 68% to Europe. So the potential for change across Africa is significant. The agreement created the largest free trade area in the world based on the number of participating countries. To link 1.3 billion people in 55 countries to a combined gross domestic product (GDP) of $3.4 trillion, the agreement comes at a time when much of the world is turning away from cooperation and free trade.

The agreement aims to reduce all trade costs and enable Africa to further integrate into global supply chains – it will eliminate 90% of tariffs, focus on outstanding non-tariff barriers, and free movement of goods and services. with the creation of a single market. Reduction in red tape and simplification of customs procedures will yield significant income. Beyond trade, the agreement also addresses the movement of individuals and labor, competition, investment, and intellectual property.

The newly launched Pan-African Payment and Settlement System (PAPSS) has the potential to: Facilitate simple and secure cross-border payments and promote intra-African trade by reducing payment transaction costs, from a platform developed by Aforeximbank and AfCFTA Secretariat. are supposed to. $5 billion annually. The African Trade Gateway, the AfCFTA Adjustment Facility, and the Trade Finance Facility are also expected to be launched, making 2022 a promising year for the effective operation and success of regional economic initiatives. However, it will take much longer for the continent to fully recover from the economic shock of the pandemic.


The continent’s free trade zone should be a game-changer for the Pan-African industry. The focus on greater intra-African trade in industrial goods has fueled African industrialization and the advancement of its manufacturing sector, providing more job opportunities for the continent’s growing young population. Also important is Pan-African cooperation in science, technology, and innovation, which will play a key role not only in COVID-19 recovery plans but also in the Decade of Action to meet the 2030 Agenda for Sustainable Development.

Amrin Ahmed

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