Intra-African Trade

“When spiders unite, they can tie up a lion.”

— Ethiopian Proverb

Intra-African trade represents a lowly 13% of the continent’s overall trade. Finding the key to accelerating cross-border trade would have a transformative effect on the African economy.

Africa’s 54 countries are tangled in what African Union officials deride as the “spaghetti bowl” of regional trade pacts—more than a dozen overlapping economic clubs. Integration has long been a continental aspiration. Yet Africa remains far more knitted into global commerce than into its own backyard.

Some progress has been made. Import duties have fallen within many regional groupings. But a dense thicket of non-tariff barriers—contradictory regulations, paperwork, and lethargic border posts—continues to hobble the flow of goods, services, capital and people. The result is a continent that trades more easily with Europe, America or China than with itself.

This failure looks especially costly now. Traditional export markets are stagnant. China is rebalancing away from an export-led model. Meanwhile, Africa’s own opportunities are underexploited. Intra-continental trade remains a paltry share of the whole—around 13% in 2016, compared with nearly 60% in Europe and 40% in North America. Colonial-era patterns endure: Africa sells raw commodities abroad, imports finished goods, and struggles to climb the value chain.

The reasons are well known. Transport networks are dilapidated; rules are inconsistent; borders are bottlenecks. Industrial bases are shallow and product ranges narrow. Countries often export what their neighbours already produce and import what they themselves cannot make. No surprise, then, that 80% of Africa’s exports still leave the continent.

South Africa has long styled itself as a continental gateway. Its pension behemoth, the Public Investment Corporation, manages over $100bn and is pushing north, with sizeable stakes in Ecobank and plans to deploy billions more. Standard Bank, the continent’s largest by assets, is present in 17 countries; its peers, too, are following African brewers and retailers into fast-growing markets. Such strategies reflect not just opportunity but necessity: South Africa’s domestic economy is sluggish, weighed down by high costs, poor schooling and fractious labour relations. By contrast, sub-Saharan Africa has expanded at roughly 5% a year.

Mining firms are also diversifying. AngloGold now derives a third of its output from outside South Africa; Gold Fields has cut its reliance on home operations in half. Telecoms are an emblem of cross-border growth. MTN, once an also-ran to Vodacom, rode Nigeria’s vast market to become Johannesburg’s most valuable company and the world’s ninth-largest mobile operator.

Continental integration is inching forward. Infrastructure corridors are being laid to link ports to hinterlands. In 2015, three regional blocs—the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA)—merged into a “Tripartite” free-trade zone covering 26 countries, 625m people and $1trn in GDP.

The record of Africa’s five big economic communities is mixed. The Arab Maghreb Union is paralysed by politics. SADC has yet to form a proper customs union. COMESA created one in 2009 but implementation is patchy. ECOWAS, in West Africa, has introduced visa-free travel and a common external tariff, but its currency project has stumbled, hindered by linguistic divides and Nigeria’s dominance. The EAC is the standout: it has a customs union, a common market, and even East African passports, with ambitions for a monetary union and political federation.

Intra-African trade is valued at roughly $180bn—just 19% of the continent’s total. The African Export-Import Bank blames low industrialisation, poor infrastructure and dependence on unprocessed commodities. Yet the direction of travel is clear. Other regions’ experience shows that deeper regional ties bring faster and more durable growth. For a continent where a third of the population is landlocked and dependent on neighbours, that lesson is especially urgent.