What does it take to meet Africa’s trade integration target?

27 May 2016

By Degol Hailu, Senior Advisor and Chinpihoi Kipgen, Research Associate, UNDP   The target of Agenda 2063 of the African Union is to see: “intra-Africa trade growing from less than 12% in 2013 to approaching 50% by 2045”. To meet this target, intra-regional trade not only needs to grow, but the sophistication of the products traded must be enhanced. For instance, from 1965 to 1990, intra-regional trade among the Asian Tigers plus China, Indonesia, Japan and Malaysia averaged 29% of their total trade. Intra-regional trade actually grew at a slightly higher average rate of 18% per year compared to 15% for extra-regional trade (trade with countries outside the group). Currently, extra-regional trade from this group of countries is just 1.7 times greater than intra-regional trade. Moreover, as a result of developed regional value chains and industrial networks, intra-regional imports of intermediate goods represent more than 50% of total imports. Intra-regional trade between the Asian countries also grew in sophistication. Today, manufactured goods make up about 70% of the total trade. Intra-regional trade in high-skill and technology intensive manufactures is among the highest in the world, accounting for 50% of regional trade. Can African economies achieve such remarkable integration? The good news … Read more

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