Standard Bank has highlighted the considerable challenges facing intra-Africa trade in 10 prominent African markets, emphasizing the persisting difficulties due to currency shortages and inadequate infrastructure. The scarcity of foreign currency, especially the US dollar essential for imports, is exacerbated by currency volatility and international capital flight, according to the 2023 Standard Bank Africa Trade Barometer.
Based on a survey of approximately 2,600 businesses, 68% of which are categorized as small, across ten countries—Angola, Ghana, Kenya, Mozambique, Namibia, Nigeria, South Africa, Tanzania, Uganda, and Zambia—the annual barometer reveals that the ease of intra-continental trade remains below the neutral score of 50. The average score for trade across these key markets is 43, indicating the prevailing difficulties faced by most businesses engaged in trade with other African nations. The survey cited poor infrastructure, complex policies, and burdensome import and export duties as primary factors contributing to the constrained trade within the continent.
Philip Myburgh, head of trade for Africa-China banking at Standard Bank’s business and commercial banking unit, highlighted the varied macroeconomic conditions across the featured countries, pointing out significant downside risks that negatively impact the trade attractiveness of these nations. Myburgh stressed that the ease of trading across borders is rated at 43 points, below the neutral score of 50, signifying the ongoing challenges in cross-border trade.
These ten countries are among the 54 signatories of the African Continental Free Trade Agreement (AfCFTA), aiming to facilitate the movement of capital and people, enhance market access, and encourage industrial development across the African continent. Despite increased awareness of AfCFTA among surveyed businesses—up from 18% in 2022 to 44% in the latest Africa Trade Barometer—intra-continental trade is still hindered by negative perceptions of infrastructure, complex policies, and high import and export duties.
The report highlighted that seven out of ten countries experienced local currency depreciation against the US dollar between 2021 and 2022, with further declines expected in 2023. Coupled with rising borrowing costs and an uncertain global economic environment following Russia’s invasion of Ukraine, this has amplified the sovereign debt burdens of several African nations, adversely affecting investor confidence and impeding cross-border trade.
Despite the challenging macroeconomic backdrop, general business confidence has improved across most of the surveyed markets, with only South Africa and Zambia experiencing a decline. Ongoing power cuts in South Africa and slow progress in debt restructuring talks in Zambia were identified as factors affecting confidence levels.
In terms of overall country rankings for 2023, Kenya, Mozambique, Namibia, and Nigeria all improved their positions, while Ghana, Tanzania, and Uganda declined. Nigeria notably saw a 10-point rise in business confidence, primarily attributed to positive impacts resulting from planned and implemented pro-business policies by the new government elected in 2023. Businesses in Nigeria noted improved ease of trading with other African countries due to less restrictive trading procedures, lower trading taxes, and growing trade relations between countries.
Standard Bank’s data collection for the 2023 Africa Trade Barometer index rankings involved evaluating seven thematic categories, including trade openness, access to finance, macroeconomic stability, infrastructure, foreign trade, governance and economy, and traders’ financial behavior. Notable improvements were seen in the rankings of Kenya, Mozambique, Namibia, and Nigeria, while Ghana, Tanzania, and Uganda saw a decline in their standings. Angola, South Africa, and Zambia maintained their positions from the previous year.
Myburgh underscored ongoing infrastructure projects across all the surveyed markets aimed at addressing infrastructure challenges. If successful, these initiatives will significantly contribute to the realization of the ambitious trade pact—the African Continental Free Trade Agreement—creating the world’s largest free trade area and fostering economic integration for almost 1.3 billion people across the African continent.