School Papers

1. Diversification of economies is thus an urgent

1.              
Africa’s
merchandise exports grew by 8.9% in 2017, twice the global trade growth at 4.3%
due to the recovery in global economy especially in Africa’s trading partners
and the overall recovery in the global trade activity. In the first quarter of
2017, Africa’s exports to China jumped by 46% with agricultural exports rising
by 18%, compared with the same period in 2016. Sharp price rises in commodities
such as copper since the beginning of 2017 contributed to the significant gains
in trade value with China. China’s total trade with Africa rose by 16.8% in the
first quarter of 2017.

 

2.              
However, Africa’s
exports to the world remain poorly diversified and dominated by primary
commodities, mainly hydrocarbons and other mineral exports. From 2010-2015,
hydrocarbons comprised 55% of Africa’s exports, with manufacturing accounting
only 18%. Despite Africa’s efforts to industrialize, Africa’s manufacturing
sector’s share in world manufacturing exports is still less than 1 percent, a
share that has even declined further since 2010. Diversification of economies
is thus an urgent imperative for Africa.

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3.              
Africa continues to be
entrenched among the lower rungs of global values chains. Despite African
economies’ declared intention to promote valued addition, industrialization
across the continent is struggling to take off. African countries’ exports
composition continued to be dominated by over 60% of total exports by raw
commodities with minimal value added. 
African countries spend some USD $30 billion a year to import processed
food from ingredients often abundant on the continent. Such trend
can be reversed through value-added agro-processing that would contribute to
creating countless jobs, especially for the growing youth population.

 

4.              
Intra-African trade has
increased from 10 to 16% of Africa’s total trade in the last five years.
However, the level of intra- African trade still
compares unfavourably with other regions of the world
– Intra-regional trade in EU is 70%, 52% in Asian countries, and 26% in
South American countries. 

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