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Monday, December 11, 2023

Intra-Africa trade to hit Sh21 trillion by 2035 on the back of AfCFTA


Africa has been on a long journey to reduce its reliance on overseas institutions and countries. When fully implemented, AfCFTA (African Continental Free Trade Area (AfCFTA), a flagship project of the African Union’s Agenda 2063 to ensure inclusive trading, is expected to reduce reliance on imports and spur intra-African trade. This, according to Standard Chartered’s Future of Trade: Africa Report, intra-Africa trade is set to grow by 3.9% per annum and reach Sh20.99 trillion ($140 billion) by 2035.

The increase is set to be as a result of double-digit growth in not only intra-regional trade in East and West Africa but also double-digit growth in the trade between East, Central and West Africa. With several countries in the regions already entering into agreements, intra-trade has already started witnessing an increase.

For example, Kenya and Congo Republic recently signed agreements to strengthen bilateral ties while Tanzania and the DR Congo are constructing a rail network, which is to connect the two countries and boosting trade. In fact, once AfCFTA is fully implemented, total intra-AfCFTA exports could almost double over the same period.

The report also states that Africa is expected to see its total export reach Sh142.70 trillion ($952 billion) by 2035, thanks to a growth of 3% per annum. Additionally, through the full implementation of AfCFTA, which would unite 54 African markets, total exports from AfCFTA markets in 2035 could potentially increase by a further 29%.

According to the report, Kenya is expected to grow its annual exports to Sh3 trillion ($20 billion). With AfCFTA, its potential is boosted by 35%. In the period, Kenya is expected to record a 12.6% increase per annum in intra-African exports and 7% increase in intra-African imports, both would acquire a potential boost by AfCFTA of up to 66% and 89% respectively.

Kenya’s trade corridors with its East Africa neighbors – Uganda, Tanzania, and Rwanda – are forecast to be some of the highest and fastest-growing through 2035. Beyond East Africa, Egypt is expected to be Kenya’s largest export partner, while South Africa is expected to remain Kenya’s largest source of imports. The main exports from Kenya are agricultural goods, with horticulture and tea being the most crucial.

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