Changes in Transcontinental Trade Look to Lift African Economies
Despite being home to many rapidly growing economies and an abundance of essential natural resources, Africa also contains numerous countries with some of the highest poverty and food insecurity rates in the world. However, new legislation and foreign support hope to ease the flow of domestic trade in Africa, allowing broader access to necessities and helping to build a strong continental economy.

The High Cost of Shipping

While Africa regularly exports goods to places such as the U.S. and Europe, only 13 percent of traded goods remain in Africa. Underdeveloped road and highway systems between neighboring countries translate to high costs in transcontinental shipments, ultimately raising the cost of transported goods to the point of unaffordability for most impoverished Africans.

For example, while the United States Agency for International Development (USAID) estimates that East Africa produces enough food to support everyone living in the region, the high cost of transportation has halted trade in the area, resulting in food insecurity for 27 percent of the people living on the continent. However, recent legislative changes and foreign support signal that trade in Africa is beginning to take on a new shape that allows for transcontinental trade and a collective African economy.

The Transcontinental Trade in Africa

The Continental Free Trade Area (CFTA), which was proposed at a meeting of the African Union in 2012, set forth goals of enhancing trade among the eight Regional Economic Communities (RECs), made up of geographic subdivisions with interconnected economies, and creating a continental trading system that would encourage foreign investment and a competitive marketplace.

While the CFTA has yet to be fully implemented, ongoing discussions, including the December 2017 meeting in Niger of 54 countries in Africa, emphasize that an economic overhaul of this magnitude is a long-term goal with results that will not be immediately apparent despite the progress being made.

In addition to internal policy changes by African governmental leaders, foreign investors seeking to take early advantage of the promising African markets have expedited growth with contributions to urban development. In Ethiopia alone, Chinese investors funded the construction of the African Union’s headquarters in the capital city of Addis Ababa in the amount of $100 million. Road and highway systems, an airport and various energy and rail transportation programs are underway with the intent of modernizing Africa’s infrastructure and turning its economy into a thriving market with a high return rate.

Improving Agriculture and Trade

USAID has been working to improve trade in Africa through the creation of Trade and Investment hubs. Furthermore, through their Feed the Future initiative, USAID is working to educate various African countries on how to improve agricultural production and how to create trading systems that both improve the economy in the trading region’s while giving others access to goods not ordinarily available in their own region.

To complement the interests from investors abroad, foreign government organizations have worked from afar and on the ground to improve trade in Africa to create a flourishing, self-sufficient set of nations and to improve living conditions for the impoverished and the food insecure people throughout the continent.

Due to the large scale of growing trade in Africa to a place of higher economic security, progress may not be readily apparent or may not appear to be moving quickly enough. However, African government officials are hopeful that, by improving trade and economic conditions at the regional level and working outwards toward an efficient continental market, Africa may soon achieve its ultimate goal and find itself in a competitive position in the world market.

Rob Lee

Photo: Flickr