TRADE among African countries, macroeconomic reforms and innovative financial tools can help stabilise economies and cut reliance on volatile global markets, according to the UN trade body.
This comes as Kenya alongside Ghana, Cameroon, Egypt, Rwanda and Tanzania continue to pilot the African Continental Free Trade Area (AfCFTA).
The trade deal still faces hiccups, with among pending issues being the rule of origin for goods such as cars and textiles.
There are also gaps on harmonisation of sub-regional economic blocs, distrust, poor infrastructure, visa requirements, customs clearance delays, certification issues and restrictive licensing regimes.
African countries also need to eliminate tariffs on 90 per cent of goods that are slowing down implementation of the continental pact, according to trade experts.
While start of trading under the AfCFTA agreement began in 2021, no major official trade has taken place under the regime, according to the AfCFTA secretariat, save for the goods moved during the trial phase.
The UN Trade and Development has since pointed out investment in infrastructure, trade diversification and small and medium-sized enterprises (SMEs) as being key to unlocking growth and driving sustainable development.
This is contained in the global body’s 2024 Economic Development in Africa Report, which outlines how Africa can transform economic vulnerabilities into opportunities through trade, investment and regional integration.
According to UNCTAD, Africa’s reliance on commodity exports, high trade costs and weak infrastructure make it highly vulnerable to external shocks.
Close to half of African countries rely on oil, gas or minerals for at least 60 per cent of export earnings, exposing them to price fluctuations.
Kenya is among countries that have felt the impact of disruption in the global maritime space by the Red Sea crisis and the Suez Canal blockage in recent times, with high trade costs affecting commodity prices and cost of doing business, mainly on its key exports.
Diversifying exports and boosting intra-African trade will hence create more stable revenue streams, UNCTAD said in its latest report.
“Africa faces serious challenges–from volatile global markets and high debt costs to infrastructure gaps,” said Secretary-General Rebeca Grynspan.
“But these challenges are also a chance to reshape the continent’s economic future. With bold reforms, investment and full implementation of the AfCFTA, Africa can emerge stronger, more resilient and more competitive.”
The continent, Grynspan said, has the potential to become a major driver of global trade and economic growth.
Kenya’s prioritised sectors in merchandise trade include agriculture, livestock and fisheries, manufacturing, handicrafts, mining, oil and gas.
The AfCFTA market is estimated
at $3.4 trillion (Sh439.1 trillion), but unlocking this potential
requires investing in infrastructure
by expanding transport, energy
and ICT networks, streamlining
trade policies and processes such as
customs and supporting industrialisation, UNCTAD has said.