Afreximbank released yesterday its annual African Trade Report.
This year’s report examined trade and economic developments in Africa in 2019, a year dominated by trade wars and escalating tariffs that resulted in sharp deceleration of global trade growth.
This has been compounded by COVID-19, and as a result, following a fall of 2.9 per cent last year, global trade is expected to shrink by 9.2 per cent in 2020.
The ATR conducted an extensive study of informal cross-border trade, the first attempt at measuring in a detailed manner the size and composition of informal trade.
Despite regional variations, the report highlighted the importance of Informal Cross-Border Trade for generating employment and income.
The report estimated that it served as a source of income for about 43 per cent of Africa’s population and is dominated by women.
In Southern Africa, female traders account for about 70 per cent of ICBT. In West Africa, food and agriculture products accounted for 30 per cent of intra-regional trade.
Commenting on the report, President of Afreximbank, Prof. Benedict Oramah, said, “Even though ICBT accounts for a significant proportion of domestic absorption and has become a major source of income for consumption smoothing, its contribution to gross domestic product is hardly recognised.”
By bringing an evidence-based approach to measuring ICBT, the report highlighted the areas that can be targeted to grow intra-African trade and transition ICBT to formality.
For example, removing technical and non-tariff barriers to trade, as well as simplifying processes, increasing access to finance, and creating payment systems that draw on digitalisation to mitigate risks will help traders scale and move up the value chain.
According to the report, ICBT is currently a cash-only business.
