Over the next 12 months, the TradeConnect initiative aims to mobilize 1,000 containers containing USD 1.2 million worth of various goods and transport them across the continent.
Increased quality, lower market prices, and greater accessibility of African products mean that African businesses increasingly prefer to trade across the continent's borders than to extracontinental markets such as Asia, the United States, and Europe. It's becoming more and more.
The latest Standard Bank Africa Trade Barometer, which tracks 10 of the 54 African signatories to the African Continental Free Trade Area Agreement (AfCFTA), found that 37% of businesses are based in Africa compared to Asia (24%) and Europe. Indicates a preference for market-based partners. (16%), North America (3%).
Companies in Namibia (75%), Tanzania (48%) and Angola (43%) are more likely to cross borders than those in Nigeria (34%) and Kenya (34%), the continent's largest economies. showed the highest affinity for trade. We strongly prefer Asian markets such as China.
“Companies surveyed report that trading within Africa is easier than trading with other parts of the world. This observation highlights the preferences they have in their trading partners. The authors of the Barometer said:
Quality of goods (72%) is the most important consideration for companies considering doing business with African partners, followed by market price (51%) and ease of market access (38%). Masu.
The rise in intra-African trade sentiment among surveyed companies is centered on good trade relations and affordable transport, with growth in August 2024 from 5% and 2% respectively in May 2023. both increased significantly to 15%.
“This result contrasts with surveyed companies' perceptions of global trade, where high transportation costs are creating tensions in trade relations,” the study said.
The continued implementation of the AfCFTA has made the greatest contribution to reducing cross-border trade barriers, driven by the Guiding Trade Initiative (GTI) launched in 2022 in eight countries and through preferential tariff agreements. We trade carefully selected products to promote trade.
Up to 30 more African countries are expected to be covered by the GTI by the end of 2024, expanding the range of products traded, including biopesticides, packaged moringa, tea, coffee and meat products. It's planned.
Other initiatives under the AfCFTA have also emerged, opening up regional borders to small and medium-sized enterprises.
In the first week of November, Kenyan micro, small and medium enterprises (MSMEs) exported various products to South Sudan, Zambia and the Democratic Republic of the Congo for the first time under the AfCFTA framework in an initiative called TradeConnect.
Over the next 12 months, the TradeConnect initiative aims to mobilize 1,000 containers containing USD 1.2 million worth of various goods and transport them across the continent.
The Kenyan government expects the TradeConnect initiative to improve Kenyan exports by 10% annually and reduce logistics nightmares for exporters by 30%.
Progress in the development of intra-African trade infrastructure linking African regions, such as the Standard Gauge Railway (SGR) connecting the port city of Mombasa and the capital Nairobi, and plans to extend it to Uganda, is also believed to be leading to lower product costs. . Shortening cross-border lead times.
Once fully operational, the SGR will cover approximately 3,800 kilometers (2,400 miles) and connect Kenya with Uganda, South Sudan, the Democratic Republic of Congo, Rwanda, Burundi and Ethiopia.
This sentiment had a positive impact on the share of intra-African trade in total African trade, which rose slightly from 13.6% in 2022 to 14.9% in 2023, according to the Barometer.
Despite being slightly larger, the majority of African companies surveyed cited high quality products (84%) and fast response times (82%) as the most important factors when doing business with China. %) and low import costs (79%). .
The nature of African companies' involvement in trade with China varies by import of finished goods and services (56%), import of raw materials (39%), and purchase of finished goods and services from Chinese wholesalers operating in Africa (56%). 16%).
Only 3% of companies surveyed prefer to do business with US-based companies, but this is most common in Kenya, where 8% of companies surveyed prefer to do business with US companies.
According to Barometer, the 10 markets with lower favorability across the board are those reporting high shipping costs (50%), high duties and taxes (37%), currency fluctuations (28%), and long lead times (27%). The company is said to be the cause. .
“This is consistent with macro-level trade data showing that exports and imports between the two regions (US-Kenya) will decline by 7.3% and 6.2%, respectively, from 2022 to 2023, although to a lesser extent,” the study said. The book reports.
— Torimogatari Agency
