Fostering Development (in Africa) Through Trade Finance

Africa accounts for just 3 per cent of global trade and has a lower proportion of intra-regional trade than any other part of the world. The continent remains overly dependent on the export of raw materials, so that growth levels fluctuate in line with international commodity prices.
2 years ago

Publisher: AfDB

Trade is the cornerstone of economic development by African countries. Botswana, Mauritius and Namibia have all transformed themselves from low income into middle income countries by improving their ability to trade in regional and global markets. Yet the continent as a whole can greatly strengthen its trading position in order to improve living standards and economic growth. Africa accounts for just 3 per cent of global trade and has a lower proportion of intra-regional trade than any other part of the world. The continent remains overly dependent on the export of raw materials, so that growth levels fluctuate in line with international commodity prices. To demonstrate the power of trade to the economic transformation of the African continent, if Africa were to increase its share of world trade from 2 to 3 per cent, that 1 percentage point increase would in nominal terms generate about US$70 billion of additional income, which is about three times the total amount of development assistance the continent receives from the rest of the world each year. Progress is being made on a piecemeal basis, with regional trade agreements and new transport infrastructure helping to promote trade between neighbouring states, but the continent is yet to experience the same kind of sustained growth levels as East Asia over the past 30 years. 
 

Illustration Photo: Sacks of cocoa beans await export to Europe at Roça Agua Izé on Sao Tome Island, São Tomé and Príncipe (credits: David Stanley/ Flickr Attribution 2.0 Generic (CC BY 2.0))

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