African exports*, 2021 –
To world: $500 billion
To Asia: $158 billion
To western Europe: $160 billion
Intra-African: $88 billion
To U.S. & Canada $30 billion
* International Monetary Fund, Direction of Trade Statistics 2021
Reflecting on the maritime past of East Africa and the Indian Ocean littoral in his Dhow Cultures of the Indian Ocean (2010), Tanzanian historian Abdul Sheriff offers an emotional appreciation of open societies and of trade as a way to share goods, ideas, and values across cultures:
“Commerce necessarily demands exchange of goods and ideas among peoples of different ecologies, cultures and religions … [T]he movement of people, the routes they follow, and the relationships they forge create unities in human history. … Mercantile communities are necessarily open societies … [whose] cosmopolitan culture is made up of elements of diverse provenance, and while this does not automatically add up to a harmonious blend, it is remarkably tolerant toward other religions, cultures, and behaviors.”
The contemporary “African Continental Free Trade Area” (AfCFTA) is in concept an effort to create such a unity, and in practical terms an attempt to at least partially solve some persistent challenges to African growth and development: Why does so little trade go on within Africa, in comparison to Europe, Asia, or the Western Hemisphere? (South African think-tank TRALAC estimates that 17% of Africa’s trade is “intra-regional”, as opposed to over 60% for Europe and Asia, and about 46% for the Western Hemisphere.). And, relatedly, how can Africa reduce its reliance on exports of primary resources to Europe, Asia, and North America, and raise its ability to produce and sell manufactures, services, and farm products?
Launched in 2018 and signed in 2020, AfCFTA now applies in 41 of 55* countries in Africa, with a combined population of 1.1 billion. These figures make it the largest free trade agreement, by country membership in the world (assuming one doesn’t consider the 164-member WTO as such a group), and second to Asia’s Regional Comprehensive Economic Partnership as the largest by population. Its elimination of a planned-for/hoped-for 97% of tariffs on intra-African trade began a year ago; participants continue to talk about approaches to services, intellectual property rules, trade facilitation and “non-tariff barriers” such as customs transparency, technical standards notification, and other challenges that are often more costly than tariffs.
While many such questions remain open, an enthusiastic World Bank study projects an extra $450 billion in continental income by 2035, with 30 million people escaping poverty, Africa’s export trade shifting a bit away from energy and metal ores to manufactured goods, and African wages rising by about 10%. Side effects include raising U.S. exports to Africa by about $12 billion in manufacturing and $2 billion in agriculture (as African growth rates and incomes rise and allow for more imports), and $10 billion in services such as education, health, and logistics; rising competitiveness vis-à-vis other regions would push up African exports to the U.S. by about $16 billion.
Economic modeling and implementation challenges aside, AfCFTA is both a detailed program for Africa’s economic future and a remarkable commitment to swim against a bleak 2020s intellectual tide, in which visions of open societies are under great pressure, governments trust each other less than in the past, and publics perhaps more likely to believe that one country’s success may require another’s loss. As such it seems not only a visionary idea, but a good example for a world that needs one just now.
* State Department count is 54 countries, including 49 in sub-Saharan Africa and 5 in North Africa. The AfCFTA’s 55 include the disputed Western Sahara.
Ghanaian President Nana Akufo-Addo at the AfCFTA Secretariat opening in 2020.
South Africa’s TRALAC (Trade Law Centre) tracks AfCFTA implementation and policy debates.
… and has a startling graphic on the cost non-tariff barriers impose on intra-African trade.
UNCTAD has a supporting website offering opportunities to report and publicize non-tariff barriers in Africa.
A statistical take from the World Bank.
And African Development Bank Chief Economist Kevin Urama on AfCFTA outlook and potential implementation challenges, 2020.
U.S. Policy
U.S. Trade Representative Katherine Tai reviews the U.S.-Africa relationship, and applauds AfCFTA, the 2021 AGOA* Ministerial.
* “AGOA” referring to the “African Growth and Opportunity Act,” a program launched in 2000 which waives tariffs on nearly all goods from participating African countries (subject to a set of eligibility criteria), accompanied by a regular series of Summits, Ministerial meetings, business/civil society dialogues, and technical assistance programs.
And still current though a bit further back, the Obama administration’s 2016 “Beyond AGOA” report — the last major U.S. policy document on the U.S.-Africa economic relationship — points to urban demographics, falling poverty rates, and accelerating technological connectivity as core trends suggesting an African economic boom in the later 2020s and the 2030s. Statistics since 2016 underline the report’s take on the data:
And two big picture looks at Africa’s cosmopolitan past:
Tanzanian scholar Abdul Sheriff’s Dhow Cultures of the Indian Ocean on East Africa, Persia, India, and Indonesia in the global economy to 1500 (with cameos from the Roman Empire,“Star Raft” navigator Zheng He, and Portuguese explorer/buccaneer Vasco da Gama), with reflections on the nature of maritime and mercantile societies.
And Francois Xavier-Fauvelle’s The Golden Rhinoceros: Histories of the African Middle Ages has a series of snapshots — drawn from Nubian state correspondence, a coral house on Kenya’ Indian Ocean coast, a Saharan salt mine, an Arab account of the Malian court, the small gold statue of a rhinoceros from Great Zimbabwe — on long-ago government, trade and diplomacy in the Sahel, Ethiopia, and the East African coast.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
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