Africa has been the second fastest growing region in the world since 2000, the Global Maritime Forum reports. In fact it has tripled its trade and diversified its trade links, but many African countries are among the poorest in the world. For this reason, the continent needs to make sure that this growth can benefit all of Africa.
In order to leverage Africa’s potential, African countries agreed on the Agenda 2063. This aims to bring sustainable change to Africa via increased cooperation. This will require mitigating issues such as improving governance, infrastructure, reducing trade barriers, investing in human capital and creating millions of new jobs.
The global maritime industry can help create sustainable and inclusive growth in cooperation with Africa and stakeholders from across the continent. The shipping industry can also play a vital role in providing jobs and training opportunities for a new generation of African talent.
In light of these, the Global Maritime Forum provides an overview of the main trends, opportunities and challenges for economic growth in Africa in 2019.
The African economy has been increasing by 4.7% every year between 2000 and 2017, making it the second fastest growing continent globally. However, there is significant variation across the continent. Namely, 33 African countries are among the least-developed countries in the world, and over 20 African countries are middle-income countries.
Regarding trade, Africa has tripled its trade with the rest of the world to over $800bn since 2000. Trade within Africa, however, makes up only a small proportion of world trade, with only around 7% of world trade being loaded and 5% being unloaded in Africa. This low level of intra-continental trade in Africa indicates the fragmentation of the African market and the dominance of raw materials in African exports.
For this reason, the GMF suggests that the African Union and many African regional economic communities have to break down trade barriers between African countries in order to adopt more intra-African trade. To achieve this, an important step is the signing of the African Continental Free Trade Area Agreement that is able boost intra-African trade by 52% by 2022 and create an annual welfare gain of $16.1bn according to UNECA.
A source of energy
Africa also has vast energy resources, both fossil fuels and renewable energy. It is estimated that establishing solar panels covering 0.3% of Africa’s landmass could provide enough electricity to cover the total demand of the EU. Nonetheless, many Africans do not have access to electricity.
Enabling access to reliable, affordable, and modern energy services, as well as renewable energy systems, is a necessary step to improving the livelihood of Africans and stimulating economic growth
Better infrastructure is key
Better infrastructure would unlock the African economic potential. In the last 20 years, investment in African infrastructure grew fast, because of global private-sector and foreign funded investments. Yet, the investment gap is far from being closed. In fact, many of Africa’s ports are poorly equipped, uneconomically operated, and do not meet global standards.
Improved governance needed
Moreover, a better governance and the reduction of administrative burdens on businesses is vital. In the World Bank’s Ease of Doing Business indicators Sub-Saharan Africa showed the lowest score in 2018 compared to all other regions in the world. However, the World Bank found that Sub-Saharan Africa was the world region that performed the greatest number of reforms in 2016/2017.
Progress is made on trade facilitation
Another obstacle to growth and trade in Africa are the cumbersome rules and procedures imposed on traders. Fortunately, multiple measures have been taken to tackle this issue. The WTO Trade Facilitation Agreement for example, requires countries to streamline the administrative procedures related to trade.
What is more, according to the Ease of Doing Business report, Sub-Saharan Africa was the region with the highest number of reforms around facilitating trade. If these efforts continue, they could significantly boost trade and economic growth in Africa.