The study, which examined businesses across 10 African countries, reveals a striking trend: 37% of surveyed companies now prefer trading with African partners, compared to just 24% with Asian markets, 16% with European markets, and a mere 3% with North American markets.
Rising Preference for African Markets
Notably, businesses from Namibia (75%), Tanzania (48%), and Angola (43%) demonstrated the strongest commitment to cross-border African trade. In contrast, economic powerhouses like Nigeria (34%) and Kenya (34%) still show a stronger inclination towards Asian markets, particularly China.
Key factors driving this continental trade preference include:
- Product Quality (72%)
- Market Prices (51%)
- Market Accessibility (38%)
The Role of AfCFTA in Transforming Trade Dynamics
The African Continental Free Trade Area (AfCFTA) has been instrumental in breaking down trade barriers. The Guided Trade Initiative (GTI), launched in 2022, has been particularly effective in facilitating trade through preferential tariff arrangements.
By the end of 2024, the initiative aims to:
- Expand coverage to 30 additional African countries
- Increase the scope of traded products, including biopesticides, moringa, tea, coffee, and meat products
Innovative Trade Initiatives
One standout example is the TradeConnect initiative, which in early November saw Kenyan small and medium enterprises (MSMEs) export products to South Sudan, Zambia, and the Democratic Republic of Congo. The program targets:
- Mobilizing 1,000 containers of goods
- Generating US $1.2 million in trade
- Improving Kenyan exports by 10% annually
- Reducing logistics challenges by 30%
Infrastructure Development
Critical infrastructure projects like the Standard Gauge Railway (SGR) are further supporting intra-African trade. Once fully operational, the railway will:
- Cover approximately 3,800 kilometers
- Connect Kenya to Uganda, South Sudan, DRC, Rwanda, Burundi, and Ethiopia
- Reduce transportation costs and lead times
Trade Numbers on the Rise
The impact is already visible. Intra-African trade as a percentage of total African trade has increased from 13.6% in 2022 to 14.9% in 2023.
Global Market Comparisons
While African businesses remain cautious about global markets, their engagement varies:
- China remains an important trading partner, with businesses valuing:
- Good quality products (84%)
- Fast response times (82%)
- Low import costs (79%)
- US trade remains minimal, with only 3% of businesses favoring American companies
- Barriers to international trade include:
- High shipping costs (50%)
- High tariffs and taxes (37%)
- Currency fluctuations (28%)
- Longer lead times (27%)
Looking Ahead
The study signals a promising future for African economic integration, with businesses increasingly recognizing the potential of continental trade. As infrastructure improves and trade agreements like AfCFTA mature, intra-African trade is poised for significant growth.
Bird Story Agency is a specialist news agency driven by the resolve to project Africa by telling positive stories about the continent.