African Trade Report

2017

Bridging Africa’s Trade

Finance Gap through
Domestic Resource
Mobilization

African Export-Import Bank

Banque Africaine D’Import-Export

Transforming Africa’s Trade

AFRICAN TRADE REPORT 2017

Bridging Africa’s Trade Finance

Gap through Domestic Resource
Mobilization

© Copyright Afreximbank, Cairo 2017. All rights reserved

No part of this publication may be reproduced or transmitted, in

any form or by any means, electronic, mechanical, photocopying,
recording or otherwise or stored in any retrieval system of any
nature without the prior, written permission of the African Export-
Import Bank, application for which shall be made to the Bank.

ISBN 978-92-95097-39-1

HEAD OFFICE
African Export-Import Bank 72(B)
El Maahad El Eshteraky Street
Heliopolis, Cairo 11341
P O Box 613 Heliopolis
Cairo 11757, Egypt
Tel: +202 24564100/1/2/3
Email. info@afreximbank.com
Website: www.afreximbank.com
Foreword
The global economy appears to be gradually recovering after two years of tepid growth. The
macroeconomic environment has been challenging despite concerted efforts at policy levels to
counter major dislocations in several markets. In the midst of that challenging global economic and
financial environment, some salient points stood out. First, for the first time in 15 years, the ratio
of trade growth to world GDP growth fell below 1:1, signaling a weakening of the long-established
relationship between the two indicators. Second, the sustained deterioration in commodity terms
of trade led to renewed external imbalances, which heightened uncertainty and macroeconomic
volatility, especially in natural resource–dependent economies in the developing world. Already
widening trade deficits in Africa were aggravated by declining trade finance in a global context
of increasing aversion to risk and a stringent international compliance environment. Finally, the
large-scale withdrawal of international banks and financial institutions from developing countries,
including those in Africa, and massive capital outflows were exacerbated by diverging monetary
policy and increased uncertainty associated with macroeconomic management challenges, most
notably currency gyrations and shortages of foreign reserves. In Africa, where financing gaps
have been consistently singled out as major constraints to investment and economic growth, the
implications were significant and evident in observed declines in Foreign Direct Investment (FDI)
flows and increased recourse to domestic resource mobilization.

The 2017 edition of the African Export-Import Bank’s annual flagship report—African Trade
Report—appropriately titled “Bridging Africa’s Trade Finance Gap Through Domestic Resource
Mobilization”—provides important insights on the critical role of inward resource mobilization in
growth and economic transition. In particular, it stresses the complementarity between domestic
resource mobilization and foreign direct investment in structural transformation. By crowding in
foreign direct investment, domestic resource mobilization creates the conditions for expanding
investments while enhancing the transfer of technology needed for industrial upgrading and
structural transformation.

As I write, the drive for domestic resource mobilization is taking hold across the continent, and
recent developments and initiatives by both the public and private sectors have been very
encouraging. Average tax revenue as a percentage of GDP has increased since the 1990s. In
addition to traditional approaches—which have primarily involved expanding fiscal space—
innovative market solutions are increasingly being considered to raise domestic resources in
support of trade and investment. These have involved local currency financing through issuance of
bonds by African sovereign and corporate entities and other options contemplated by banks and
financial institutions to leverage African resources to support intra-African trade.

The 2017 edition of the African Trade Report also provides a comprehensive analysis of the state of
global and African trade in 2015–16. It is published at a time when the institution is rebranding, with
implications for all Bank publications. This combined issue, which ensures continuity in the coverage

4  AFREXIMBANK  AFRICAN TRADE REPORT 2017

and publication of the Bank’s flagship report, is an exceptional measure, and subsequent issues will
revert to an annual review covering developments in global and African trade.

While overall trade contracted in 2015–16, stemming the incremental growth in African trade
of prior years, intra-African trade was more resilient, essentially absorbing global shocks. The
Report reviews the progress related to ongoing efforts to boost intra-African trade by further
mitigating the region’s exposure to global volatility and by deepening economic integration within
the continent. The signing of the Tripartite Framework Agreement in 2015 and progress towards
establishing the Continental Free Trade Area were particularly important.

Other initiatives undertaken to boost African trade in 2015–16 include measures to improve the
trade-enabling environment and African trade–facilitating initiatives to expedite the movement,
release and clearance of goods. Despite the challenging global and African economic context,
a growing number of African countries improved their trade-enabling environment, recording
significant improvement in trade facilitation metrics between 2014 and 2016. At the global level
the most important development in the context of rising anti-trade rhetoric was the ability of the
international development community to sustain the momentum towards adoption of the Trade
Facilitation Agreement by members of the World Trade Organization.

Looking ahead to the near term, Africa is expected to enjoy stronger economic growth and trade
in 2017 and beyond, riding on the momentum of the global economy, although weak investment in
the face of low commodity prices and productivity growth will continue to weigh on the medium-
term outlook. Growth prospects are also likely to be affected by downside risks associated with
ongoing rebalancing in China—Africa’s main trade partner. To mitigate against these risks and set
the region on a sustainable growth path, the Report argues for expanding intra-African trade to
achieve economies of scale and for pursuing structural transformation to increase productivity
and diversify the sources of Africa’s growth and exports. These two priorities form the bedrock
of the Bank’s Fifth Strategic Plan covering 2017-2021. The Plan, dubbed Impact 2021—Africa
Transformed will inform the Bank’s intervention in member countries over the next five years.

Dr. Benedict O. Oramah

President and Chairman of the Board of Directors
The African Export-Import Bank
Cairo, Egypt
June 2017

AFREXIMBANK  AFRICAN TRADE REPORT 2017  5

Table of Contents
8 Introduction and Executive Summary
10 Domestic Resource Mobilization and Structural Transformation
10 Global and Regional Output in 2015–16
11 Merchandise Trade
12 Prospects
12 Structure of the Report

14 Bridging Africa’s Trade Finance Gap Through Domestic Resource Mobilization

16 Domestic Resource Mobilization and Structural Transformation in Africa
17 Successes and Failures in Domestic Resource Mobilization and Structural
Transformation
19 Approaches to Mobilizing and Deploying Domestic Resources
23 Policy Lessons for Africa

26 Economic environment
26 Output and Price Developments
36 International Financial Markets and Financing Conditions

40 Trade and the Trading Environment

40 Global Trade
42 Global Trading Environment
45 Africa’s External Reserves and Exchange Rates

58 Commodity Prices

72 Rising Protectionism in Global Trade

75 Protectionist Measures by Type
75 State Aid
75 Trade Defence Measures
79 Import Tariff Measures
80 Standards and Technical Barriers to Trade
80 Trade Finance Measures
81 Other Protectionist Measures
81 Trade Disputes

86 Trade facilitation
88 The World Trade Organization Trade Facilitation Agreement
90 Africa’s Trade-Enabling Environment
93 Africa’s Trade Facilitation Initiatives

98 Intra-African Trade
101 Intra-African Trade Champions
105 Intra-African trade developments for selected countries
108 Trade within regional economic communities

110 Prospects

113 References
1
Chapter One
Introduction and
Executive Summary
As the global economic recovery continues
to struggle against economic headwinds, this
report—with the theme “Bridging Africa’s
Trade Finance Gap Through Domestic
Resource Mobilization”—reviews major
developments in the global and African
macroeconomic and trade environment in
2015–16. Continued weakness in the global
economy characterized by synchronous
growth decelerations in most developing
economies, including China; by lingering
effects of the fiscal and sovereign debt
crisis in the Eurozone; and by financial
market volatility—all of which contributed
to dampening global demand at a time
of creeping protectionism and sustained
deterioration in commodity terms of trade—
had adverse implications for liquidity,
especially trade and development finance
for Africa. These patterns exacerbated
challenges related to macroeconomic
management—that is, management of fiscal,
monetary, real and external sectors—faced
by African countries over the past two
years, hindering Africa’s trade and economic
growth.
In 2015–16, the global economic
environment was affected by the divergence
of monetary policy, with the US Federal
Reserve committing to a gradual tightening
of interest rates. It raised the federal funds
rate in December 2015, from the zero lower
bound, and in December 2016. Monetary
policy remained highly accommodative
AFREXIMBANK  AFRICAN TRADE REPORT 2017  9
in Japan and the Eurozone, reflecting
continued risk of stagnation or deflation.
Episodes of volatility and the US Federal
Reserve’s rate hikes affected global financial
markets through tighter external financial
flows, declining capital flows, and currency
depreciations. Developing economies, which
faced structural imbalances, slower growth
and lower commodity prices, were the most
affected by global liquidity constraints in
2016.
In a region where infrastructure and trade
finance gaps are wide, the increasingly
tightening financing conditions at the
global level and the large-scale withdrawal
of international banks from the region and
particularly from correspondent banking
relationships have heightened the urgency
for Africa to pay more attention to domestic
resource mobilization in order to ensure that
financing to boost trade and infrastructure
development in support of growth and
structural transformation is sustained.1
1 The annual global infrastructure financing gap is
estimated at US$3–4 trillion and at US$93 billion
for Africa, mainly covering basic infrastructure,
housing, health and education (World Economic
Forum (2014); Foster and Briceno (2009)). The
region’s trade financing gap is conservatively
estimated at around US$120 billion a year
(African Development Bank, 2014).
1.1 Domestic Resource
Mobilization and Structural
Transformation
For this report the African Export–Import
Bank undertook a study to explore options
for drawing on domestic resources to
“bridge Africa’s trade finance gap”. It found
that the shortage of hard currency across
the region has been exacerbated by capital
outflows that have seen capital-starved
economies become net exporters of financial
resources (see chapter 2). The counter-
intuitive direction of financial flows from
Africa is at odds with other regions of the
world where domestic resource mobilization
has played a key role in financing economic
development and trade.
The findings of the study—which was
motivated by efforts to draw on global
best practices to increase domestic
resource management to support growth
and economic development—highlight
a contrast in development strategy and
outcomes, most notably between Africa
and other developing regions. While foreign
direct investment has played a key role in
growth and structural transformation of
local economies in Asia over the last few
decades, investment has been financed
primarily by surplus savings that ultimately
crowded in foreign investment. In Africa, by
contrast, structurally low domestic savings
constrains the growth of physical capital,
even though high marginal product and
subsequent attraction of capital should have
been expected, especially given the region’s
excess natural resource endowment and
growing population.
1.2 Global and Regional Output in
2015–16
Growth in global output decelerated
marginally, from 3.4 percent in 2014 to 3.2
percent in 2015 and 3.1 percent in 2016,
largely mirroring the growth decelerations
10  CHAPTER ONE  AFRICAN TRADE REPORT 2017
that characterized developing economies,
especially those in the Commonwealth of
Independent States, Latin America and the
Caribbean, and Developing Asia. Developing
Asia was the leading driver of global
growth and trade, and the deceleration of
its output growth more than outweighed
the modest recovery in Group of Seven
countries.
African economies showed resilience in
2015–16 despite the challenging global
environment. The difficulties posed by
falling global demand and counter-shocks
in commodity markets with the plunge in
prices for commodities of export interest to
Africa—particularly oil—emerged as major
downside risks to growth and trade in a
region where oil-exporting countries account
for more than half of gross domestic product
(GDP) and over 55 percent of exports. These
risks were compounded by difficult domestic
conditions such as heightened security
concerns. Aggregate output in Africa
expanded at a moderate rate, with average
GDP decelerating slightly, from 3.9 percent
in 2014 to 2.9 percent in 2015 to around 2.8
percent in 2016.
In tandem, global financial markets
experienced phases of turbulence and
volatility in 2015–16, leading to massive
capital outflows, especially where foreign
direct investment was dominated by
portfolio flows, with adverse implications
for macroeconomic management. These
moves in financial markets were driven
primarily by continued global uncertainties
and uninspiring growth in developed
economies; increasing macroeconomic
management challenges in developing
economies; divergent monetary policies
between the US Federal Reserve and other
major central banks, leading to volatility
in capital markets; slowdown in growth
and uncertainty over the rebalancing
of the Chinese economy; weaker global
commodity prices; and increasing
protectionism.
1.3 Merchandise Trade
Growth in the volume of world merchandise
trade became increasingly lethargic in
2015–16, declining from 2.8 percent in
2014 to 2.7 percent in 2015 to 1.3 percent
in 2016. Volatility in exchange rates and
persistent weaknesses in global commodity
prices, particularly for oil, which are priced in
US dollars, resulted in a divergence between
world merchandise trade figures in 2015–16
by volume and by value. Volume remained
flat in 2015, but the value showed a sharp
decline, with world merchandise exports
falling 14 percent from 2014 (US$19 trillion)
to 2015 (US$16 trillion) and 3.3 percent from
2015 to 2016 (US$15.46 trillion).
North American exports grew marginally,
at 0.5 percent in 2016, down from 0.8
percent growth in 2015 and 4.1 percent in
2014. This sluggishness largely reflected
weaknesses in the merchandise exports of
the United States, the largest economy in
the region. In Asia growth in merchandise
exports rebounded slightly, to 1.8 percent
in 2016 from a slump of 1.1 percent in 2015,
but remained far below the 4.3 percent
in 2014. The deceleration of merchandise
exports in the region was due largely to
weak performances in China and India,
the two largest economies in the region.
In Brazil and other developing economies,
growth in exports remained weak in 2015–16
due to low prices of oil and other primary
commodities and to higher exchange rate
volatility. Brazil was hit by a wave of political
scandals, a deep recession, a fiscal crisis and
falling export prices, which undermined the
performance of South and Central America,
whose merchandise exports grew 1.3
percent in 2016.
Africa’s total merchandise trade fell 14.3
percent from 2014 (US$1.21 trillion) to 2015
(US$1.03 trillion) but rebounded 4.1 percent
in 2016 (to US$1.08 trillion). The contraction
in 2015 was due largely to slow growth in
many developed and developing economies,
AFREXIMBANK  AFRICAN TRADE REPORT 2017  11
weak global demand for commodities and
a challenging global environment, including
the sharp decline in global commodity prices
and the slowdown of the Chinese economy.
However, China is still Africa’s largest
country trade partner—accounting for 16.3
percent of Africa’s total trade in 2015 and
11.9 percent in 2016—followed by France—
which accounted for 6 percent of Africa’s
total trade in 2015 and 4.8 percent in 2016.
The European Union remained Africa’s
largest trade partner—accounting for 43.2
percent of Africa’s total trade in 2015 and
38.9 percent in 2016, though its share has
been steadily declining over the last few
years (after a peak of 45.1 percent in 2013).
Following growth of 8.6 percent in 2015,
intra-African trade grew marginally by 0.6
percent in 2016, to US$156.94 billion. While
still below the peak of US$174.9 billion in
2013, this growth was driven by a modest
recovery in commodity prices, particularly
in energy markets; improved regional trade
across regional economic communities;
and some countries’ increased focus on
promoting intra-African trade. Trade within
regional economic communities remained
buoyant, aided by market access preferences
and continued efforts to develop trade and
transport corridors for intra-African trade.
At the regional level the Southern African
Development Community (SADC) remained
the most vibrant trading bloc on the
continent, underpinned by strong demand
for South African exports from other SADC
countries, despite the dampening effect of
the decline in energy prices. South Africa
(23.3 percent), Nigeria (8.5 percent) and
Namibia (8.1 percent) were the drivers of
intra-African trade. Still, at about 15 percent
of the continent’s total merchandise trade,
the share of intra-African trade compares
unfavourably with intra-regional trade in
other regions—Europe (67 percent), Asia
(58 percent), North America (48 percent)
and Latin America and the Caribbean (20
percent).
1.4 Prospects
Global growth is projected to rise to 3.5
percent in 2017, from 3.1 percent in 2016,
as global economic activity continues its
gradual improvement, supported by rising
investment and manufacturing output
coupled with an expected pick-up in global
demand. Underpinned by accommodative
policies, cyclical recovery, rising global
manufacturing and improving market
confidence, the gradual pick-up in economic
activity among developed economies is
expected to be sustained. The US economy
is projected to strengthen, driven by
growing public spending, especially on
infrastructure; increasing manufacturing
output; and rising consumer spending on
the back of falling unemployment. In the
Eurozone, the combined effects of cyclical
recovery from the global financial crisis,
abatement of the impact of the sovereign
debt crisis, and accommodative monetary
policy are expected to sustain the pace of
2016’s growth at 1.7 percent in 2017.
Growth in developing economies is projected
to strengthen slightly, on the back of strong
activity in India and expected recovery in
Brazil. However, major downside risks include
sustained growth deceleration in China as
the country rebalances, with consequent
dampening effects on commodity prices
and revenues in commodity-dependent
countries; tighter external financing
conditions; and pronounced reversal of
capital flows to the United States owing
to gradual increases in interest rates by
the US Federal Reserve, which are likely to
strengthen the US dollar.
African economies are projected to
strengthen, with growth quickening to about
3.4 percent in 2017, up from 2.8 percent in
2016, largely reflecting the gradual recovery
in developed economies and knock-on effect
on global demand, which will help sustain
the upward momentum of most commodity
prices and lift the growth of Africa’s
merchandise trade. The projected recovery
12  CHAPTER ONE  AFRICAN TRADE REPORT 2017
of the largest economies in Africa, notably
Nigeria on account of higher oil prices and
growing public investment as well as South
Africa and Angola, is also expected to pull up
GDP growth on the continent.
Growth in the volume of global merchandise
trade is projected to strengthen to 2.4
percent in 2017, from 1.3 percent in 2016,
mirroring improvements in the global
economy, led by a synchronized modest
expansion in developed economies, notably
the United States, Canada, and France, and
a slight pick-up in developing economies,
driven by strong performance in India and
recovery in Russia and Brazil. Potential
downside risks include sustained growth
deceleration in China. Also, uncertainty
associated with trade arrangements
between the United Kingdom and the
European Union after the vote on Brexit and
the spectre of rising protectionism could
limit the global recovery.
Still, intra-African trade is projected to
improve as countries in the region continue
to undertake measures and initiatives at
the national and regional levels to boost
intra-regional trade with a view to insulate
themselves from global shocks. Efforts
across the continent to deepen regional
integration are expected to build a solid
foundation for dynamic intra-African trade
in the medium to long term, especially
the Tripartite Free Trade Area aimed at
deepening and strengthening economic
integration in Southern and Eastern Africa;
the Common External Tariff of the Economic
Community of West African States to
promote investment and industrialization
and facilitate exports of processed goods;
and the Continental Free Trade Area.
1.5 Structure of the Report
The report is organized in nine chapters.
Chapter 2 presents thematic research on
domestic resource mobilization. Chapter 3
reviews global macroeconomic and financial
developments, including Africa’s, while
Chapter 4 discusses the global trade and
trading environment. Chapter 5 looks at the
dynamics of commodities, with an emphasis
on commodities of trade interest to Africa.
Chapter 6 examines the re-emergence
of protectionism and its implications
for global and African trade. Chapter 7
discusses trade facilitation, highlighting
Africa’s particularities while reviewing the
role of such facilitation in promoting trade
and economic growth. Chapter 8 focuses
on intra-African trade. Chapter 9 reviews
growth, development and trade prospects.

AFREXIMBANK  AFRICAN TRADE REPORT 2017  13

2
Chapter Two
Bridging Africa’s Trade
Finance Gap Through
Domestic Resource
Mobilization
Capital is essential for industrial upgrading,
sectoral diversification, trade and
infrastructure development, and many
successful developing economies rely on
domestic capital mobilization for investment
and growth. High saving and investment
rates have helped the economies that have
consistently achieved robust economic
growth rates over the last 25 years, setting
them on a path to substantial capital
accumulation. For instance, in China, Japan
and the Republic of Korea foreign direct
investment played only a small role in
industrial investment. Instead, domestic
resources were crucial for upgrading and
capacity growth.
In contrast to the Asian development
model, decades of insufficient foreign direct
investment and of capital flight have left
African economies severely undercapitalized,
compromising total factor productivity and
prolonging disinvestment by limiting returns
to capital and ultimately undermining
the diversification of Africa’s trade and
its integration into the global economy.
Ndikumana (2015,) argues that “by
draining domestic resources, capital flight
perpetuates dependence on external aid
even as it undermines aid effectiveness”.
AFREXIMBANK  AFRICAN TRADE REPORT 2017  15
Furthermore, capital account liberalization,
supported by Washington Consensus
reform prescriptions, induced capital flight
and may have constrained accumulation
(Hermes and Lensink 2014). In seeking
to stimulate industrial growth in sectors
consistent with comparative advantages,
developing countries often require
immediate capital injections. Given the
continuing frictions in international capital
flows, sources of rapid capitalization exist
more among domestic investors than
among foreign investors. Domestic resource
mobilization is thus crucial to economic
transformation and must be understood
from both a historical and cross-sectional
perspective. It may even be more important
now that there is a concerted effort to
accelerate industrialization of African
economies, as illustrated by the selection of
industrialization and export development
as the second pillar of the African Export–
Import Bank’s Fifth Strategic Plan.
The Monterrey Consensus, which emerged
from the United Nations International
Conference on Financing for Development
in 2002, emphasized the role of domestic
resource mobilization in achieving the
Millennium Development Goals. The
2005 UN Millennium Project included
domestic resource mobilization in a suite
of initiatives alongside capacity building,
public investment and official development
assistance. According to USAID (2016),
domestic resource mobilization programmes
generate US$20 in increased revenue for
every US$1 of related assistance. In 2014
the United States announced a US$63 million
programme to assist countries in mobilizing
domestic resources for public health
initiatives. The variety, scope and depth of
challenges facing developing countries—
public health, education, infrastructure
(including trade-supporting infrastructure),
to name just a few—require more resources
than what foreign aid can provide. This
partly explains the rising interest in domestic
resource mobilization from both academia
and practitioners.
This chapter examines the importance
of domestic resource mobilization for
growth, trade and economic development
and structural transformation in Africa,
highlighting key persistent challenges. It
discusses various successes and failures
in raising domestic resources in support
of investment and growth from around
the globe. And it concludes with lessons
for domestic resource mobilization and
structural transformation as well as policy
lessons for Africa.
2.1 Domestic Resource
Mobilization and Structural
Transformation in Africa
In an early study of Asian developing
countries, Dowling and Hiemenz (1983)
operationalized governments’ role in
domestic resource mobilization as a
ratio of tax revenue to gross domestic
product (GDP), finding that government
contributions to domestic resource
mobilization have a significant positive
effect on GDP growth despite the
diminishing effect of higher taxes on private
capital formation. Vos et al. (2007) took a
16  CHAPTER TWO  AFRICAN TRADE REPORT 2017
less sanguine view, arguing that financing
Millennium Development Goal initiatives from
taxes and domestic borrowing has negative
macroeconomic impacts, including “Dutch
Disease” (rising real exchange rates due
to rapid capital inflows), the crowding-out
of private investment and less disposable
income. They argued that domestic resource
mobilization strategies can also have
unexpectedly delayed effects.
Scholarship has also explored different
types of domestic resource mobilization.
Binagwaho and Sachs (2005) argued that
value-added taxes are an example of
broad-based revenue initiatives needed
to expand the fiscal space for increased
resource mobilization. They recommended
“rechanneling current low-priority spending
into higher priority MDG investments” (p.
55).
Chong-Hyun and Chang-Jin (2000) found
that the Republic of Korea’s corporate
sector accounts for a large percentage of
national savings and was crucial in mobilizing
domestic resources in the country’s rapid
development in the 1960s and 1970s.
Extending the focus on the private sector,
Fofack and Ndikumana (2009) argued that
a potential source of domestic resources
for Africa lies in repatriation of a vast
store of capital that fled the continent for
foreign banks. For example: the depletion of
domestic resources in Nigeria throughout
the 1970s and 1980s, when capital outflows
exceeded foreign debt accumulation (Ajayi
1995). Weisskopf’s (1973) study of post-
colonial India argued that the government’s
failure to limit demand for foreign goods
and services (particularly among wealthy
consumers) constrained the growth of
domestic capital.
While domestic capital markets are a
potentially valuable source of domestic
resource mobilization, many African
countries’ under-developed or under-
diversified industrial structures reduce
their ability to channel surplus savings
to productive investments. Options for
drawing on external financing in the form
of portfolio investments to the region are
constrained because most African countries
are not connected to the global financial
architecture and because their financial
infrastructure deficits of the last few years
have further increased their dependency on
foreign aid.
Tax reform, although it has been shown
to hamper domestic consumption and
raise producer costs, is an opportunity for
governments to improve domestic resource
mobilization (Ndikumana et al. 2015).
Nevertheless, Africa continues to suffer
from constraints to domestic resource
mobilization.
Understanding the role of industrial policy
and institutions in the growth patterns of
resource-rich developing countries requires
understanding the links among domestic
resource mobilization, capital inflows and
outflows, and economic transformation.
Africa suffers from low physical capital
despite having abundant natural resources
and a large population. These conditions
suggest the potential for high marginal
product and subsequent attraction of
capital—but they have not materialized.
The two channels of capital inflows for
upgrading—government and the private
sector—are both subject to perceptions
of sovereign risk. Domestic and foreign
investors must be assured that returns
are lucrative and that loan repayments
are guaranteed; financial intermediation
is one method of addressing these
concerns. According to Ndikumana
and Blankson (2015, p. 24), “efficient
financial intermediation…helps to channel
resources into the most productive
investments”. However, Africa’s weak
financial intermediation constrains the flow
of capital from private creditors to private
borrowers. Costs associated with financial
intermediary activity are numerous, and
transaction costs are higher than those in
AFREXIMBANK  AFRICAN TRADE REPORT 2017  17
developed countries, limiting capital flows
where government institutions are weak,
loan markets thin, lending capacities low and
trust among contracting parties lacking. The
financial intermediary industry is designed
to address such lending risks, but in Africa
its underdevelopment has been a substantial
deterrent to foreign direct investment.
Other risks that hamper capital inflows
and raise Africa’s external finance
premium include the threat of domestic
and international banking crises, which
reduces available risk capital; erroneous
perceptions of high risk associated with
investing in Africa; and weak or missing
financial markets. These factors illustrate
the challenges of mobilizing external
resources for Africa and the need to explore
the prospects for domestic resource
mobilization.
2.2 Successes and Failures in
Domestic Resource Mobilization
and Structural Transformation
Many African countries still face the
challenging growth conditions once endured
by many developing countries in the
post–World War II era: poor infrastructure,
low educational attainment, high death
rates with high population growth, and
dependence on extractive industries
and manufactured imports. Many
developing post-war economies adopted
an industrialization strategy centred on
capital-intensive manufacturing, seeking
to replicate the success of such industries
in developed countries. However, this
abrupt strategic shift was incompatible with
the factor endowments of these largely
agrarian economies. Further, it allocated
aid capital and already scarce domestic
capital to comparative advantage–defying
industries (industries that are non-
viable in competitive markets and require
government policy support for their initial
investment and continuous operations).
Consequently, modern industries in
developing countries, including Africa, failed
to achieve the success of those in developed
countries and remain uncompetitive and
unprofitable.
To account for the costly and disruptive
mismatch between industrial structure and
factor endowments, most governments
in Africa and other developing countries
embraced interventionist policies, moving
away from strict laissez-faire policies to
protecting failing industries. However, this
artificial support generated opportunities
for rent-seeking behaviour, corruption
and embezzlement (Kornai 1986; Schaffer
1998; Kornai et al. 2003). A perverse
symbiosis emerged whereby firms relied
on government subsidies and intervention
despite the distortionary nature of such
policies, and government relied on the
survival of firms to maintain output,
employment and social stability.
The reforms prescribed by post-war
development institutions and governments
embracing neoliberal ideology falsely
18  CHAPTER TWO  AFRICAN TRADE REPORT 2017
attributed stagnation to government
failures, calling for the immediate and
comprehensive removal of distortions and
envisioning a single massive leap from
central planning to market-based resource
allocation. However, these recommendations
were founded on an incomplete
understanding of the interdependencies
between governments and uncompetitive
industries, which over time had ossified
into an endogenous, albeit unproductive,
equilibrium based on the misguided strategy
of import substitution. Lacking any economic
protection, these industries quickly failed
and sent tenuously stable developing
economies plummeting, in an era in Africa
known as the lost decades (Artadi and Sala-
i-Martin 2003; Fofack 2014). Countries that
continued with market-distorting policies
“under the radar” likewise suffered—first
because new supportive policies were less
efficient than the ones they replaced and
second because developed countries with
competitive industries commanded an
increasing share of global trade and crowded
out firms from developing countries.
Notable counter-examples include the
rapidly developing post-war economies
of East Asia and Southeast Asia, as well
as China. These newly industrializing
economies eschewed the structuralist
model of import substitution that focused
on comparative advantage–defying and
capital-intensive heavy industries and
instead adopted a dual-track approach that
maintained support for unviable industries
while opening the production market to
private firms. They also acquired foreign
technologies to achieve structural change
oriented towards comparative advantages.
The resulting growth of labour-intensive
industries initially generated rapid growth
and attracted industries from countries with
increasingly high labour-cost structures.
Over time, economic prosperity enabled
these economies to invest public and
private surpluses to improve factor
endowments, including in infrastructure,
technology-based industrial upgrading and
workforce education. As they advanced
rapidly through development stages, their
constantly evolving factor endowment
structures enabled them to become
globally competitive in higher value-added
production, particularly leading-edge
technology. Examples are the Republic of
Korea’s automobile industry; Taiwan, China’s
semiconductor industry; and Singapore’s
petrochemicals industry, all of which
leveraged national comparative advantages
such as labour productivity and innovative
capacity.
Africa seems to have followed a different,
if not the opposite, path. Despite evidence
that comparative advantage is the basis
of an effective growth strategy, many
African countries failed to identify priority
industries, while industrial policies have
generally been ineffective. This failure has
led to the allocation of resources either
to existing low-growth industries or to
advanced, overly ambitious, comparative
advantage–defying industries. This strategic
failure has perpetuated economic stagnation
AFREXIMBANK  AFRICAN TRADE REPORT 2017  19
and unemployment and kept several
countries in a low-income trap.
The inherent strategic flaw is that
governments targeted industries that
did not take into account comparative
advantages, forcing firms into competitively
untenable positions where they were
compromised either by low product quality
or by high factor prices. In the absence of
market distortions these firms were non-
viable in globally competitive markets,
and globalization only magnified growing
gaps in competitiveness. Exploiting the
weaknesses of economic planning elsewhere,
firms in the newly industrializing economies
entered markets with lower barriers to
trade and outperformed the beneficiaries of
legacy industrial policies in less successful
countries.
To support initial investments and ensure
favoured firms’ continued operations,
African governments “doubled down”
on their bad bets by channelling more
resources into non-viable firms and sectors
and by adopting numerous protectionist
measures such as subsidies and tariffs.
This misallocation led ultimately to rent-
seeking by beneficiary industries but did
nothing to improve long-term development.
A fatal knock-on effect of this strategy was
the suppression of investment returns,
prompting capital flight and inhibiting
foreign direct investment in most industries,
natural resources aside. Under these
conditions the Lucas Paradox arose (capital-
starved economies became net exporters of
financial resources), reflecting low domestic
returns to capital and lost confidence among
investors, foreign and domestic (the latter,
owners of wealth often derived from rents
and rent-seeking).
2.3 Approaches to Mobilizing and
Deploying Domestic Resources
Almost all developing countries began
their transition to the market system in
the 1980s, out of pressure to improve
development performance that had lagged
under economic planning. Most countries
in Africa and Latin America followed the
Washington Consensus but were caught
in the lost decades of the 1980s and
1990s. By contrast, several economies in
East Asia adopted a gradual approach to
development that avoided an immediate
and full-scale embrace of free markets. This
strategy proved highly successful, with
these countries achieving macroeconomic
stability and sustaining dynamic growth.
A comparison of these case types offers
lessons for transition strategies.
Before the advent of the 20th century’s
rapid and unprecedented industrial
restructuring, growth in developing
countries was constrained by non-viable
firms in legacy sectors. Transition strategies
recommended by development advisors
and aid organizations encouraged African
governments to immediately eliminate
all distortions, precipitating sectoral
collapse and leading to deindustrialization,
unemployment and strains on social
support efforts. This fallout was particularly
challenging at a time when government
budgets were constrained by falling
revenues. Washington Consensus–based
reform prescriptions also discouraged
governments from facilitating firms’ entry
into sectors consistent with comparative
advantages. So capital returns stayed low
and capital flight endured.
By contrast, successful transition economies
illustrate how a pragmatic and gradual
approach enabled a smoother industrial
restructuring without the economic and
social disruptions accompanying free market
“shock therapy”. The dynamic transition
economies of China, Vietnam, Mauritius
and Cambodia adopted this approach using
a dual-track strategy. First, governments
continued to provide transitional support
to non-viable firms in legacy sectors and
removed distortions only when those firms
became viable or their sectors contracted.
20  CHAPTER TWO  AFRICAN TRADE REPORT 2017
Second, governments facilitated private
firms’ entry into sectors that were
consistent with national comparative
advantages latent before transition. This
dual strategy ensured stability while
stimulating dynamic growth. It was also
favourable to domestic resource mobilization
and foreign direct investment.
According to Lin and Monga (2010, p. 18),
“Policymakers around the world, especially
in developing countries, still face difficulty in
identifying actionable specific policy levers
that can help ignite and sustain the type of
dynamic growth rates that are necessary
to reduce poverty”. There are numerous
cases of successful economic transformation
that can serve as examples for aspiring
countries, but few are as dramatic and
instructive as China’s, especially for growth,
trade performance and poverty reduction.1
Deng Xiaoping’s reforms and “open door
policy”, while appearing to outsiders to be
an embrace of neoliberal market reforms, in
reality represented a nuanced approach to
development that simultaneously supported
legacy industries by retaining some market
distortions while liberalizing factor markets
and enabling private sector growth to
pursue comparative advantage–following
industries.
This gradual and hybrid strategy helped
China avoid the negative economic and
social impacts endured by countries that
chose, or were coerced into, shock therapy
liberalization. With stable and shock-
free economic growth, China’s household
consumption fell as a percentage of GDP,
while fixed asset formation and net exports
rose. Growing savings provided a financial
asset base to support industrial upgrading.
Although China must eventually address
growing income inequality, unsustainable
1 In its transition to a fully developed economy,
China achieved sustained and rapid economic
growth while reducing its poverty rate from 85
percent in 1981 to 24 percent in 2004, lifting 600
million people out of poverty (World Bank 2010).
pension systems and lingering distortions in
finance, natural resources and services, the
success of its dual-track model is evidence
of its validity. According to Lin (2013, p.
265), “No country in human history has ever
grown so fast for so long as China did in the
past three decades”.
Comparative advantage–based industrial
policies have mitigated the risks of the Lucas
Paradox in developing economies, and the
results provide insights for governments
and development finance institutions.
In designing transition strategies and
performance, countries must first identify
an optimal economic governance framework
that turns latent comparative advantages
into “quick-win activities” that can be scaled
up in support of structural transformation.
To achieve this goal, countries must
AFREXIMBANK  AFRICAN TRADE REPORT 2017  21
reinterpret legacy economic planning
as an industrial policy that emphasizes
a facilitating but non-interventionist
state. This type of industrial policy casts
government not as an arbiter of sectoral
determinism and favouritism, but as a
provider of infrastructure and coordination
that help industries attract capital and grow
endogenously around factor endowments
and comparative advantages. While
government tasks may vary across countries
depending on development conditions and
the needs of industries and firms, industrial
policy must be applied tactically, given the
limited resources and capacity of the public
sector.
The opportunities for domestic resource
mobilization are promising, but the
challenges are equally formidable. A
development approach that avoids the
interventionist determinism of traditional
structural economics on the one hand, while
shunning the anti-government ideology
of neoliberalism on the other, implies that
governments are responsible for conditions
that attract foreign direct investment
in sectors aligned with comparative
advantages.
A new generation of economic governance
reflects this approach to balanced and
pragmatic economic stewardship and
regards governments as facilitators of
growth, creators of markets, enforcers
of institutional norms and providers of
enabling infrastructure. Further, these tasks
must occur within the context of aligning
industrial structure with factor endowments.
In soliciting investment amid an increasingly
competitive and financially constrained aid
environment, countries must consider stores
of capital held domestically. Encouraging
domestic investors to commit their money
to domestic firms and industries partly
involves effective “branding”: a commitment
to good governance and prudent industrial
policy should be as reassuring to domestic
investors as it is to foreign investors.
Lin (2012, p. 5) states that “Economic
development is a process of structural
change with continuous technological
innovations, industrial upgrading, and
improvement in infrastructure and
institutions”. To this end, modern economic
development is a process of continuous
growth identification and facilitation:
technological innovation and industrial
upgrading that requires consistency in
capital flows. Under the right conditions
developing countries can achieve middle-
or even high-income status after several
decades of dynamic growth, but only if
they exploit comparative and latecomer
advantages. Poor development performance
in Africa is the result of inadequate ideas
that have wrongly shaped government
policies for economic transition. Indeed,
policy credibility requires availability of funds
22  CHAPTER TWO  AFRICAN TRADE REPORT 2017
to propel the continent towards accelerated
growth and structural transformation. The
right ideas, in combination with a new regime
of cooperation among developing countries,
can help African countries transform natural
endowments into productive assets and
grow as dynamically as the world’s most
successful economies.
In this context, and given declining external
capital flows, mobilization of domestic
resources has gained traction among African
governments, policy makers and academics.
As available data on foreign reserves
suggests, the challenge has not been lack
of resources but the ability to effectively
harness existing financial resources. Foreign
reserves held by African central banks on
behalf of their countries grew rapidly over
the last 20 years (Figure 2.1), fuelled by the
commodity super-cycle and debt relief under
the World Bank’s Heavily Indebted Poor
Countries (HIPC) Initiative, which enabled
countries to grow their reserves. External
reserve holdings of African countries rose
from US$42 billion in 1995 to US$550 billion
in 2013 before declining because of the
end of the commodity super-cycle. Despite
this wealth of liquidity, Africa’s reserves are
either largely domiciled offshore or invested
in foreign securities, which consequently
restricts their use in funding viable trade,
project and developmental needs of the
continent.
A number of African countries are now
making concerted efforts to mobilize
domestic resources in support of long-
term investment and economic growth by
improving tax collection, broadening the tax
base, reducing capital flight and increasing
financial resource mobilization. The African
Capacity Building Foundation (ACBF) (2015)
notes that African countries have sought to
improve fiscal revenues through reforms to
boost domestic resource mobilization. These
reforms include measures to modernize
revenue management administration,
expand the tax base, combat illicit financial
flows and leverage financial resources. Tax
Figure 2.1: Africa’s reserve position, 1995–2016 (US$ billions)

600 -

500 -

400 -

300 -

200 -

200 -

100 -

0-
1995

1996

1997

1998

1999

2000

2004
2001

2002

2003

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016
Source: World Bank World Development Indicators Database, Afreximbank Annual Reports (2010-2016)

revenue performance in African countries trade and significant foreign exchange

shows a positive trend, with average tax earner for the country.
revenue as a share of GDP rising from 22
percent in 1990 to 27 percent in 2000, and Similarly, several African countries used
reforming and widening the tax net of the domestic bond issuances to raise resources
continent will help address loopholes in in support of investment projects. The
existing tax structures. African Development Bank’s African Financial
Markets Initiative Bloomberg African Bond
African sovereigns, multilateral financial Index, which assesses and tracks the market
institutions and, to a smaller extent, value of Africa’s most liquid local currency
corporations are also increasingly tapping sovereign bond issuances, had a market
into domestic currency markets to finance capitalization of US$160 billion at the end
large-scale infrastructure development of 2016, up from US$146 billion at the end
projects or investments, drawing on of 2013, as Nigeria, South Africa, Ghana and
excess liquidity in the domestic banking Namibia reverted to domestic resources to
system coupled with low yields while champion national development efforts.
mitigating currency risks. For instance, The African Export-Import Bank, through
the government of Côte d’Ivoire has its Central Bank Deposit Programme, is
successfully mobilized funds from within also supporting mobilization of domestic
the West African Economic and Monetary resources that can be deployed to galvanize
Union and manages a local currency bond intra-Africa trade and boost the continent’s
portfolio of around US$4.6 billion. Ethiopia structural transformation.
introduced a housing savings programme;
introduced pension programmes
for government, nongovernmental 2.4 Policy Lessons for Africa
organizations and the private sector; and
issued diaspora bonds to finance large The efforts by African countries to
projects such as the Grand Renaissance mobilise and deploy domestic resources is
Dam (ACBF 2015). Egypt issued domestic commendable and should be done in the
bonds to leverage finance for the expansion context of a robust industrial strategy.
of the Suez Canal, a main artery for global An overview of the history of economic

AFREXIMBANK  AFRICAN TRADE REPORT 2017  23

development suggests that a winning
strategy is one where developing countries
look at what they can do well, based on what
they have, and then create the conditions
to scale up what they can do well (Lin 2012).
The case of successful developing economies
is used to provide the following five policy
lessons for African countries.
First, countries must base their industrial
promotion strategies on their current
stage of development. This requires a
diligent and honest accounting of factor
endowments, a robust strategy to facilitate
their contribution to the development of
targeted growth industries and a robust
understanding of how the country’s tradable
goods industries can become globally
competitive or how to enhance the global
competitiveness of that country’s growth
industries. Further, countries must embrace
rather than deny their backward status in
technological innovation, upgrading existing
technologies and committing resources to
acquiring and integrating new technologies
for upgrading efforts. This process must
be repeated for each development stage
when it is reached, as factor endowment
structures will evolve and new opportunities
for comparative advantage will emerge.
Second, efficient and reliable institutions
are essential for loosening production
24  CHAPTER TWO  AFRICAN TRADE REPORT 2017
bottlenecks that discourage investment,
particularly for hard infrastructure, logistics,
information sharing, financial capital,
bureaucratic red tape, legal systems,
workforce development and all other
transaction costs. This requires stability and
consistency across multiple policy arenas
and, depending on a country’s bureaucratic
capacities, may also require deep
administrative reforms and restructuring.
Two examples are special economic zones
and financial institutions.
For countries struggling to address these
constraints through comprehensive national
policy and administrative reforms, special
economic zones provide a small-scale
policy laboratory for testing experimental
initiatives in a controlled environment.
Special economic zones also facilitate
the development of highly specialized
infrastructure and generate economies
of scale (multiple users sharing the same
facilities) and economies of scope (facilities
for one purpose can be used for other
purposes). This approach, which includes
industrial parks, export processing zones
and other forms of concentrated economic
activity, has been used to productive
effect in China and Southeast Asia. For
example: Chinese government’s 1979 special
economic zone initiatives in Shenzhen, which
precipitated one of history’s most dynamic
urban growth stories, transforming a fishing
village of fewer than 100,000 people into a
modern metropolis of 19 million that serves
as an anchor for the Pearl River Delta, home
to 45 million. The region’s transformative
economic progress is evidence in part of
the effectiveness of the special economic
zone approach, and lessons from Shenzhen
ultimately informed similar initiatives across
China.
Further reforms should target financial
institutions, which should be tailored to
meet the needs of labour-intensive firms
in the emerging industries of developing
countries (Lin et al. 2013). Many developing
countries have adopted, by choice or
coercion, the types of domestic financial
systems that serve the economic structures
and interests of developed countries.
Developing countries need smaller scale
financial institutions that cater to the types
of firms, often at the household level, that
supply factors of production to larger
firms. As these countries progress through
development stages, financial institutions
can be redesigned to serve the increasingly
sophisticated needs of larger domestic
producers.
Third, an efficient market is an important
institutional mechanism for signalling the
relative prices of production factors—not
only to global investors but also to firms in
growth industries that might relocate from
developed countries. These markets help
the private sector identify a country’s cost-
based comparative advantages by reflecting
the scarcity of production factors within
the country’s endowment mix, thereby
mobilizing capital towards productive
uses. The collective strategic decisions
of profit-maximizing entrepreneurs, who
are driven to substitute low-cost factors
of production for high-cost factors, are
generated naturally and without market
incentives in an industrial structure that
efficiently aligns itself with a country’s
factor endowments. Here, markets play an
essential role in facilitating the endogenous
AFREXIMBANK  AFRICAN TRADE REPORT 2017  25
growth of comparative advantage–
following industries, free from the risks
and distortions of direct government
intervention.
Fourth, countries must work to increase
capital abundance in their factor endowment
structures, enabling the intermediate
upgrading of existing industries and the
longer term structural transformation away
from labour-intensive industries and towards
capital-intensive industries. From a policy
perspective rapid capitalization is possible
through budgetary and fiscal prudence,
including revenue collection, and through
industrial profitability, including support
of industries that are aligned with their
comparative advantages. As a country’s
industries achieve efficiency, profitability
and global competitiveness, theory holds
that capital inflows will accelerate through
international financial markets. Additionally,
investments will become more attractive to
domestic entrepreneurs.
Finally, governments must monitor trends
in shifting factor endowments, identifying
and supporting firms in growth industries
and in industries with latent comparative
advantages. One important lesson is
that “government should know which
new industries are consistent with the
country’s changing endowment structure,
and which infrastructure and institutions
require improvements to enable those
new industries to thrive” (Lin 2012,
p. 6). With this industrial monitoring
also comes the need for governments
to adopt a counter-cyclical policy in
economic shocks; for example, in periods
of recession, governments should invest
in infrastructure to take advantage of
low costs of capital and to stimulate the
macroeconomic environment through
investment and employment. Government
investments in hard and soft infrastructure,
along with institutional improvement,
facilitate the type of dynamic structural
change that keeps national development on
pace.
3
Chapter Three
Economic Environment

3.1 Output and Price
Developments
The Global and African economic
environment remained challenging during
2015-2016. The sluggish recovery of
developed economies and the slowdown in
developing countries, mainly China, were
key factors dragging down global growth.
This chapter reports on the global and
African economic environment with a focus
on output and price developments and
financial market developments and financing
conditions.
3.1.1 Global
Global economic activity remained subdued
in 2015–16 after a marginal pick-up in 2014.
From 3.4 percent in 2014, growth in global
output declined to 3.2 percent in 2015 and
further to 3.1 percent in 2016 (Table 3.1
and Figure 3.1). The outturn in 2015 was
driven by growth decelerations in developing
economies, especially those in the
Commonwealth of Independent States, Latin
America and the Caribbean, and Developing
Asia, whose rate of decline outweighed the
modest recovery made by Group of Seven
countries, especially Canada, Germany and
Japan. However, hampered by unfinished
post-crisis adjustments, especially within
the Eurozone, performance in 2016 largely
mirrored the sluggish recovery in developed
economies after the 2008/09 global financial
crisis. It was also affected by the adverse
impact of growth decelerations in developing
market economies, especially in a context of
sustained declines in commodity terms of
trade.

Figure 3.1. Global Output and Inflation (Percent)

Real GDP (%) Inflation (%)

4.5 - 9-
4- 8-
3.5 - 7-
3- 6-
2.5 - 5-
2- 4-
1.5 - 3-
1- 2-
0.5 - 1-
0- 0-
World Developed Developing Africa World Developed Developing Africa
Economies Countries Economies Countries

2015   
  2016

AFREXIMBANK  AFRICAN TRADE REPORT 2017  27

 Table 3.1 Developments in Global Output, 2014-16

Exchange Rate Real GDP Growth Inflation Rate Interest Rate (3-month), %
(End of period) (annual percent change) (annual percent change) (end of period)
2014 2015 2016* 2014 2015 2016* 2014 2015 2016* 2014 2015 2016*
WORLD 3,42 3,20 3,08 3,23 2,78 2,09
DEVELOPED ECONOMIESa) 1,88 2,08 1,57 1,37 0,27 0,75
US 1,00 1,00 1,00 2,43 2,60 1,60 1,61 0,12 1,19 0,12 0,23 0,64
UK 0,64 0,67 0,81 2,99 2,20 2,00 1,47 0,05 0,74 0,54 0,55 0,49
France 0,82 0,92 0,95 0,18 1,30 0,90 0,61 0,09 0,35 0,21 -0,02 -0,26
Japan 119,93 120,49 116,72 -0,10 1,20 1,70 2,76 0,79 -0,16 0,21 0,17 0,07
Italy 0,82 0,92 0,95 -0,43 0,70 0,60 0,23 0,11 -0,05 0,21 -0,02 -0,26
Canada 1,16 1,39 1,35 2,44 0,90 2,20 1,92 1,11 1,62 1,17 0,82 0,82
Germany 0,82 0,92 0,95 1,58 1,50 1,60 0,79 0,14 0,40 0,21 -0,02 -0,26

28  CHAPTER THREE  AFRICAN TRADE REPORT 2017

Memo Item
EURO Area 0,82 0,92 0,95 1,08 2,04 1,66 0,43 0,03 0,28 0,21 -0,02 -0,26
DEVELOPING COUNTRIES 4,57 4,02 4,17 5,85 4,70 4,50
Africa 3,91 2,89 2,84 6,41 6,77 8,06
Developing Asia 6,77 6,65 6,51 3,49 2,70 3,10
Latin America and the Caribbean 1,03 -0,03 -0,55 4,89 5,53 5,82
Developing Europe 2,81 2,59 3,28 3,78 2,90 3,10
Commonwealth of Independent States 1,07 -2,80 -0,26 8,07 15,47 8,41

* Estimates

Sources:
1) IMF World Economic Outlook Database (January, 2017)
2) Afreximbank Plan V Strategy
3) Oanda, Currency Converter (2017)
4) OECD (2017)
Global activity in 2015–16 was also
influenced by a gradual slowdown and
rebalancing of economic activity in China—
the lead driver of global trade and growth—
away from investment and manufacturing
towards domestic consumption and services,
which continued to adversely impact global
demand and commodity prices. In addition,
lower commodity prices, persistent volatility
in financial markets, subdued investment,
less accommodating financing conditions,
gradual tightening in US monetary policy
and uncertainty over creeping protectionism
and greater use of anti-trade rhetoric also
dampened global activity.
After a modest recovery in 2015, when
output in developed economies grew 2.1
percent—up from 1.9 percent in 2014—
output growth decelerated to 1.6 percent
in 2016, due largely to deflationary threats
and rising uncertainty. Growth in the
United States, which strengthened from
2.4 percent in 2014 to 2.6 percent in 2015,
decelerated to 1.6 percent in 2016. Output
in the United Kingdom followed a similar
trend of slowing for two consecutive years,
with growth of 2.2 percent in 2015 and 2
percent in 2016, down from 2.9 percent in
2014. While weakening growth in the United
States was attributed partly to global
uncertainty, low investment (especially in
energy) and low labour productivity (due
to a deceleration in the capital-intensive
manufacturing and energy-producing
industries), economic activity in the United
Kingdom, especially in 2016, was hit by
uncertainty over the Brexit vote and the
future trade arrangements between the
United Kingdom and the European Union in
the post-Brexit era.
The Japanese economy continued on its
recovery path with sustained growth
expansion over the past two years, after
contraction in 2014. The Canadian economy
recovered from a blip in 2015, when growth
was 0.9 percent, posting growth of 2.2
percent in 2016 on the back of increased
household consumption and a strong
AFREXIMBANK  AFRICAN TRADE REPORT 2017  29
financial services sector, but expansion
remained below the 2.4 percent in 2014.
Recovery in the Eurozone remained
lacklustre. After a sharp rise, from 1.1
percent in 2014 to 2 percent in 2015, real
GDP growth decelerated to 1.7 percent
in 2016. Output expansion in the bloc
was supported by firm domestic demand
and some growth in investment, though
recovery remained slow, with investment
on the downside in many economies in
the zone. Although financial markets
remained resilient, the legacy of the crisis,
including inadequate demand, high debt and
elevated unemployment, continued to pose
challenges to robust growth. Germany, the
bloc’s largest economy (accounting for about
30 percent of its GDP), showed growth of
1.8 percent in 2016, a slight recovery from
the 1.5 percent in 2015 and 1.6 percent
in 2014. The improvement derived from
solid domestic demand driven by increased
consumption and from strong export
performance.
Economic activity across developing
countries picked up slightly, to 4.2 percent
in 2016, after a decline to 4 percent in 2015
from 4.6 percent in 2014. While 2015’s
slow growth was due primarily to the
slump in commodity prices, deceleration in
developing economies (especially China),
heightened uncertainty and global financial
market volatility, the marginal improvement
in 2016 was driven by the gradual pick-up in
commodity prices in the second half of the
year and by countries’ policy responses to
mitigate the impact of the lingering effects
of the global economic crisis. Growth in
developing economies in 2015–16 was
driven largely by Developing Asia, despite
the sustained growth deceleration in China,
with Africa stagnating at about 2.9 percent
(see Table 3.1 and Figure 3.1).
The Middle East showed mixed results in
2015–16. Growth contracted 0.5 percent
in 2015, from 2.5 percent in 2014, owing
to plummeting oil prices, but improved
markedly in 2016, to 2.5 percent, thanks to
expanded output in Gulf Cooperation Council
countries and a modest improvement in oil
prices, increased government spending and
solid domestic investment. However, activity
in the region’s oil-importing countries
remained insipid on the back of deep-
rooted inefficiencies in economic structures,
conflicts, persistent political instability and
geopolitical tensions in several countries.
Output in Latin America and the Caribbean
contracted in both 2015 and 2016. From
anaemic growth of 1 percent in 2014,
output contracted 0.03 percent in 2015 and
0.6 percent in 2016. Exports fell short of
expectations in both years, and the terms
of trade deteriorated in some countries.
Domestic factors were also important as
Brazil, the region’s largest economy, slipped
into recession during the period.
After a moderate pick-up in 2014, growth
in Central and Eastern Europe blipped in
2015 but recovered to 3.3 percent in 2016.
While the deceleration in 2015 was due to
weaknesses in some countries, especially
amid political tensions and timid private
investment, the improvement in 2016
was stimulated by strong net exports and
accelerated activity reflecting a pick-up
in investment, falling unemployment and
higher public spending in some countries,
especially Hungary. After posting growth
of 1.1 percent in 2014, the Commonwealth
of Independent States saw contractions in
2015–16. A drop in investment in Russia and
Ukraine, because of geopolitical tensions,
and lower oil prices weighed on the region’s
performance.
Global inflationary pressures continued to
ease in 2015–16, owing to declining headline
inflation on falling commodity prices. Core
inflation remained relatively stable but was
generally below most central bank inflation
objectives. Global inflation eased from 3.2
percent in 2014 to 2.8 percent in 2015 and
dipped further, to 2.1 percent, in 2016 (see
Table 3.1 and Figure 3.1).
30  CHAPTER THREE  AFRICAN TRADE REPORT 2017
Inflation in developed economies slowed
to 0.3 percent in 2015, from 1.4 percent in
2014, owing to weaker commodity prices,
declining global demand and general
decelerations in economic activity globally.
However, the gradual pick-up in commodity
prices in 2016 contributed to renewed
inflation, which inched up to 0.8 percent.
Inflation in the United States eased in 2015,
from 1.6 percent in 2014 to 0.1 percent, but
inched higher in 2016, to 1.2 percent. The
US Federal Reserve raised interest rates
for the first time in almost a decade in the
last quarter of 2015. The movement in the
general price level in 2015 was anchored
on a tight monetary policy stance of the
Federal Reserve, while increased inflation in
2016 was driven by market reaction to the
incoming Trump Administration’s promise of
expansionary policies.
Inflation in the United Kingdom slowed from
1.5 percent in 2014 to 0.1 percent in 2015,
owing to fiscal tightening and to lower food,
energy and fuel prices. However, the Bank of
England’s loose monetary policy, intended to
boost growth after the Brexit referendum in
June 2016, put upward pressure on prices,
with inflation rising to 1.2 percent that year,
driven largely by prices of key non-food
items such as fuel and clothing.
After years of deflation, the inflationary
gains achieved in Japan during 2014
appeared to have been mitigated in 2015–
16, as the change in prices levels declined
from 2.8 percent in 2014 to 0.7 percent
in 2015 to 0.2 percent in 2016, influenced
largely by global trends.
In the Eurozone, inflation declined from
2014 to 2015 on the back of fragile domestic
demand and lower energy, oil and food
prices, though average price increases
climbed to 0.3 percent in 2016, from
0.03 percent in 2015, partly because of
quantitative easing by the European Central
Bank, but remained below the 0.4 percent in
2014.
For developing countries generally,
inflationary pressures eased with the end of
commodity super-cycle. Inflation declined
from 5.9 percent in 2014 to 4.7 percent in
2015 and to 4.5 percent in 2016.
In contrast to global and regional trends,
Africa recorded a modest increase in
inflation, from 6.4 percent in 2014 to 6.8
percent in 2015 to 8.1 percent in 2016.
Currency depreciation in oil-exporting
countries raised the price of imported
goods and exerted upward pressure on
prices. Similarly, the CFA franc, which is the
currency of most oil-exporters in the Central
African Economic and Monetary Community
(including Cameroon, Chad, Republic of
Congo, Equatorial Guinea and Gabon) and
which is pegged to the euro, depreciated
against the US dollar in line with the euro,
stoking inflationary pressures. But the
global oil price slump provided support to
real incomes in most oil-importing countries
and contributed to lowering inflationary
pressures.
3.1.2 Africa
Growth in Africa’s aggregate output slowed
from 3.9 percent in 2014 to 2.9 percent in
2015 to 2.8 percent in 2016 (see Table 3.1
and Figure 3.1). After 2014, falling global
demand and plunging prices for commodities
created challenges for the continent that
required fiscal adjustments. Matters were
exacerbated by difficult domestic conditions
such as heightened terrorist activities and
the prolonged effects of the Ebola outbreak
in West Africa.
The overall deceleration in 2016 stemmed
from macroeconomic management
challenges relating to the end of the
commodity super-cycle, the continued
slowdown in China, pockets of socio-political
instability in some parts of North and West
Africa, sluggish growth in the Eurozone
(still one of Africa’s largest trade partners),
and a weak pickup in economic activity in
other developed economies. Needless to
AFREXIMBANK  AFRICAN TRADE REPORT 2017  31
Figure 3.2. Average Real GDP Growth of
African Net Oil Exporters and Importers,
2015-16 (Percent)
Real GDP (%)
4.5 -
4-
3.5 -
3-
2.5 -
2-
1.5 -
1-
0.5 -
0-
2015 2016
Oil Exporters    
  Oil Importers
say, growth in output varied across the
continent.
In 2015–16 oil-exporting countries in Africa
saw growth decelerate, from 2.8 percent in
2014 to 2.4 percent in 2015 to 0.3 percent
2016 (Figure 3.2 and Table 3.2). The trend
reflected continued weakness in oil prices
owing to subdued demand, driven largely
by the slowing Chinese economy, and a
global supply glut, led by high production
in members of the Organization of the
Petroleum Exporting Countries and by
increased oil production in the United
States and Canada. These patterns exerted
pressure on export receipts of African
oil exporters, depressing their reserves
and leading to sharp fiscal adjustments in
some countries, particularly the largest
oil producers, Nigeria and Angola. The
difficulties of this group were compounded
by lingering socio-political unrest in parts of
North Africa, particularly Libya, Sudan and
South Sudan, which disrupted oil production
and overall economic activity.
Although GDP growth in oil-importing
countries declined marginally in 2015, to
3.2 percent from 3.4 percent in 2014, on
Table 3.2 Africa: Real GDP Growth, 2014 - 16 (annual percent change)

Country Name 2014* 2015* 2016**

Algeria 3,80 3,90 3,57
Angola 4,80 3,01 0,00
Benin 6,54 4,96 4,60
Botswana 3,21 -0,26 3,11
Burkina Faso 4,01 4,03 5,20
Burundi 4,49 -3,96 -0,51
Cameroon 5,93 5,80 4,80
Cape Verde 1,87 1,45 3,63
Central African Republic 1,04 4,80 5,19
Chad 6,89 1,77 -1,11
Comoros 1,95 1,03 2,16
Congo, Dem. Rep. of 7,92 6,92 3,94
Congo, Rep. of 9,47 2,32 1,75
Côte d’Ivoire 6,85 8,54 7,98
Djibouti 6,00 6,50 6,50
Egypt 2,24 4,20 3,83
Equatorial Guinea -0,50 -7,44 -9,87
Eritrea 4,99 4,78 3,67
Ethiopia 10,32 10,20 6,49
Gabon 4,32 4,01 3,18
Gambia -0,22 4,38 2,31
Ghana 3,99 3,88 3,34
Guinea 1,11 0,14 3,85
Guinea-Bissau 2,54 4,80 4,80
Kenya 5,33 5,65 5,99
Lesotho 3,45 2,83 2,39
Liberia 0,69 0,02 1,96
Libya -24,03 -6,38 -3,32
Madagascar 3,32 3,12 4,14
Malawi 5,70 2,95 2,70
Mali 7,04 5,96 5,31
Mauritania 5,35 1,24 3,22
Mauritius 3,62 3,50 3,52
Morocco 2,55 4,51 1,85
Mozambique 7,44 6,61 4,50
Namibia 6,46 5,30 4,24
Niger 7,05 3,55 5,23
Nigeria 6,31 2,65 -1,75
Rwanda 6,96 6,91 6,00
Sao Tome and Principe 4,50 4,00 4,00
Senegal 4,34 6,49 6,64
Seychelles 6,21 5,74 4,88
Sierra Leone 4,56 -21,08 4,29
Somalia n/a n/a n/a
South Africa 1,63 1,27 0,12
South Sudan 2,92 -0,17 -13,12
Sudan 1,61 4,88 3,05
Swaziland 2,45 1,66 0,47
Tanzania 6,97 6,96 7,17
Togo 5,40 5,40 5,30
Tunisia 2,26 0,80 1,50
Uganda 4,93 4,81 4,94
Zambia 5,03 3,00 3,01
Zimbabwe 3,85 1,06 -0,29

* Revised
** Estimates
n/a not available
Sources: IMF (2016) World Economic Outlook Database (October)

32  CHAPTER THREE  AFRICAN TRADE REPORT 2017

the rippling effect of the general economic
downtown, the net benefit accruing from
the commodity price shock to this group saw
their output increase 3.9 percent in 2016.
The pick-up was driven largely by a dynamic
services sector led by telecommunications,
banking, a growing construction industry
and higher consumer spending, as well as
infrastructure investment.
Regional variations
Except for North Africa, which experienced
a contraction, other regions saw growth
decelerate. The weakest performer was
Central Africa. On inflation, North Africa was
by far the poorest performer, as inflation
there shot up, while in Eastern and Central
Africa it abated.
North Africa saw GDP grow 2.2 percent in
2014 and 1.7 percent in 2015 but contract
0.4 percent in 2016 (Figure 3.3 and Table
3.2). For most countries in the region the
deceleration and subsequent contraction
in the face of rising macroeconomic
management challenges was driven by loss
of revenue from declining commodity prices,
exacerbated by socio-political instability
in Libya. The tourism sector in Egypt and
Tunisia was hit by security concerns.
Figure 3.3. Africa: Output by Region,
2015–16 (Percent)
7-
6-
5-
4-
3-
2-
1-
0-
-1 -
North South West East Central
2015   
  2016
AFREXIMBANK  AFRICAN TRADE REPORT 2017  33
Inflationary pressures in North Africa
increased in 2015–16, with inflation surging
to 80.2 percent in 2016, from 4.3 percent
in 2014 and 15.1 percent in 2015 (Figure
3.4 and Table 3.3). Currency depreciations
pushed up import costs, particularly in
Algeria and Egypt. Reductions in subsidies
and rising domestic demand also raised
prices, particularly in Algeria, Egypt and
Morocco.
Figure 3.4. Africa: Inflation by Region,
2015–16 (Percent)
90 -
80 -
70 -
60 -
50 -
40 -
30 -
20 -
10 -
0-
North South West East Central
2015   
  2016
Although economies in Southern Africa
witnessed a moderate increase in output
growth in 2015, they lost steam in 2016.
GDP growth was up from 2.4 percent in
2014, to 2.7 percent in 2015, but decelerated
to 2 percent in 2016 due to challenges facing
the South African economy, the largest
in the region. That country’s economy
remained weak, growing only 0.1 percent
in 2016, down sharply from 1.3 percent in
2015. The economy was choked by recurrent
power shortages and their adverse effects
on manufacturing, coupled with dwindling
global demand for the country’s major
natural resources. The poor performance
of other economies, notably Lesotho,
Swaziland and Zimbabwe, caused by
weaknesses in commodity markets and a
major drought, also undermined growth.
Table 3.3 Africa: Inflation, 2014- 16 (annual percent change)

Africa 2014* 2015* 2016**

Algeria 2,92 4,78 5,90
Angola 7,30 10,29 33,68
Benin -1,08 0,27 0,60
Botswana 4,40 3,04 3,20
Burkina Faso -0,26 0,91 1,64
Burundi 4,42 5,55 6,34
Cameroon 1,85 2,75 2,20
Cape Verde -0,24 0,13 0,09
Central African Republic 11,60 4,50 4,01
Chad 1,68 3,68 0,00
Comoros 1,35 2,00 2,20
Congo, Dem. Rep. of 0,45 1,24 1,00
Congo, Rep. of 1,24 0,96 1,67
Côte d’Ivoire 0,91 2,01 4,04
Djibouti 2,94 2,10 3,00
Egypt 10,10 10,99 10,20
Equatorial Guinea 4,30 1,70 1,45
Eritrea 10,04 9,00 9,00
Ethiopia 7,40 10,12 7,71
Gabon 4,51 0,10 2,50
Gambia 6,25 6,81 8,33
Ghana 15,49 17,15 17,02
Guinea 9,71 8,15 8,18
Guinea-Bissau -1,03 1,48 2,64
Kenya 6,88 6,58 6,15
Lesotho 4,02 5,32 8,60
Liberia 9,86 7,74 8,57
Libya 2,80 14,10 14,20
Madagascar 6,08 7,40 6,74
Malawi 23,78 21,86 19,78
Mali 0,89 1,44 0,97
Mauritania 3,77 0,49 1,31
Mauritius 3,22 1,29 1,45
Morocco 0,44 1,55 1,30
Mozambique 2,29 2,39 16,70
Namibia 5,35 3,40 6,60
Niger -0,94 1,01 1,60
Nigeria 8,05 9,01 15,38
Rwanda 1,78 2,51 5,33
Sao Tome and Principe 6,99 5,26 3,89
Senegal -1,08 0,13 1,01
Seychelles 1,39 4,04 -0,80
Sierra Leone 8,29 8,97 9,73
Somalia n/a n/a n/a
South Africa 6,07 4,59 6,40
South Sudan 1,66 52,81 476,02
Sudan 36,91 16,91 13,49
Swaziland 5,68 4,96 6,97
Tanzania 6,13 5,59 5,22
Togo 0,19 1,80 2,10
Tunisia 4,92 4,85 3,75
Uganda 3,13 5,52 5,51
Zambia 7,81 10,11 19,10
Zimbabwe -0,21 -2,41 -1,58

* Revised
** Estimates
n/a not available
Sources: IMF (2016) World Economic Outlook Database (October)

34  CHAPTER THREE  AFRICAN TRADE REPORT 2017

Southern Africa’s inflation increased to
12 percent in 2016, having receded to 6.4
percent in 2015 from 6.6 percent in 2014.
That marginal reduction was on account
of low oil prices and falling global demand,
while the increase in 2016 reflected regional
variations in consumer prices. For example,
Zimbabwe faced deflationary pressures,
but other countries, notably Angola and
Mozambique, witnessed double-digit rates in
2015–16. The rise in inflation in the region in
2016 was driven by huge price increases in
Angola and Mozambique, which had inflation
of 33.7 percent and 16.7 percent, driven by
food, non-alcoholic beverages, and imported
clothing and footwear.
West African economies witnessed a second
consecutive year of decline in output
growth, from 5.4 percent in 2014 to 5.3
percent in 2015 to 4.1 percent in 2016.
The declining economic fortunes of the
region were anchored on continued low
oil prices and reduced oil export revenues
in Nigeria, the region’s largest economy,
AFREXIMBANK  AFRICAN TRADE REPORT 2017  35
which experienced a sharp contraction,
with knock-on effects on other countries.
Foreign exchange reserve constraints and
a weakening naira demanded drastic fiscal
adjustments that dented the country’s
growth. Growth also decelerated in other
major economies: from 3.9 percent in 2015
to 3.3 percent in 2016 in Ghana, largely
on account of the commodity price slump
and rising macroeconomic management
challenges. Still, West Africa’s growth
remained fairly robust on the back of strong
activity in Côte d’Ivoire and Senegal, where
socio-political stability, improved investor
confidence and large-scale infrastructure
projects were undertaken, including in roads,
ports, airports, telecommunications and
construction.
Following the easing from 5.6 percent in
2014 to 4.2 percent in 2015, the average
rate of inflation in West Africa increased to
5.2 percent in 2016. Price developments
in 2015 reflected low commodity prices,
especially fuel prices, which reduced energy
costs across all sectors. In the West African
Economic and Monetary Union the pegging
of the CFA franc to the euro limited inflation
in 2016 to the increase in price levels caused
by a gradual pickup in commodity prices,
improved economic activity, heightened
uncertainty and financial market volatility.
After posting the strongest growth
of all regions in 2015, Eastern Africa
remained relatively stable in 2016. Growth
decelerated from 6.1 percent in 2014
to 5.8 percent in 2015 to 5.3 percent
in 2016, but the region remained the
continent’s strongest performer. While
real GDP growth has been driven partly
by robust public and private investment
in transport infrastructure, buoyant
household consumption and continued
implementation of programmes and policies
to deepen economic integration within the
East African Community,1 the continued
expansion of the region’s growth was also
buttressed by strong activity in Kenya—
the region’s largest economy—on the
back of a vibrant services sector driven by
banking, telecommunications and retail. In
Tanzania growth was supported by steep
investment and continued government
efforts to expand manufacturing. In Uganda
output was influenced by strong private
consumption, high government spending
and a healthy financial services industry.
Inflation in Eastern Africa eased to 4.9
percent in 2016 after inching up to 5.4
percent in 2015 from 5.3 percent in 2014.
Inflationary pressures reflected booming
economic activity in the region, fuelled by
declining energy prices, massive investments
in infrastructure and industry, and a
stable macroeconomic environment. More
recently, the deceleration of inflationary
pressures has been due partly to Kenya,
where inflation dropped from 6.6 percent in
2015 to 6.2 percent in 2016 as the country
recovered from previously high inflationary
pressures caused by high food prices due
1 Burundi, Kenya, Rwanda, Tanzania and Uganda.
36  CHAPTER THREE  AFRICAN TRADE REPORT 2017
to the El Niño weather phenomenon that
brought heavy rains.
Central Africa persisted in its poor economic
performance in 2015–16, with growth
slowing from 3.8 percent in 2014 to 2
percent in 2015 to 1.3 percent in 2016.
The sustained deterioration in commodity
terms of trade, especially in a region where
most countries are oil exporters, had drastic
effects on output in Equatorial Guinea
and Republic of Congo, which dragged the
region’s growth downwards. Socio-political
difficulties in Central African Republic and
recurrent terrorist activities in northern
Cameroon, coupled with frequent clashes
with rebels in the Goma, Katanga and Kivu
regions of Democratic Republic of Congo,
also considerably dampened economic
activities in the region.
Inflation in Central Africa dropped for the
second consecutive year in 2016, from 4.1
percent in 2014 to 2.9 percent in 2015 to 2.6
percent in 2016, reflecting weak economic
activity and falling oil prices, and the peg of
the CFA franc to the euro.
3.2 International Financial Markets
and Financing Conditions
Global financial markets experienced
turbulence and volatility in 2015–16. In 2015
market sentiment was driven by continued
global uncertainties and sluggish growth
in developed economies; by increasing
macroeconomic management challenges
in developing economies; by divergent
monetary policies between the United
States and other major central banks,
leading to volatility in capital markets; by the
slowdown in growth and uncertainties over
the rebalancing of the Chinese economy; and
by the global geopolitical environment. The
Brexit vote and the associated economic and
financial risks heightened uncertainty and
market volatility in 2016. Additionally, the
election of Donald Trump as US president
ushered in a period of policy uncertainty
but raised expectations of an expansionary
fiscal policy, which boosted asset prices and
fuelled a rally in equity prices. The slowdown
in China and the cyclical downtrend in
commodity prices moderated. Financial
markets improved from 2015, generally
showing some resilience and adjusting to
risks surrounding potential spill-over effects.
Monetary policy remained divergent, with
the US Federal Reserve committing to a
gradual tightening of interest rates. It raised
the Federal Funds rate in December 2015,
from the zero lower bound, and in December
2016. Monetary easing in the Eurozone
and Japan proceeded as envisaged, with
their central banks keeping interest rates
stable and within the zero lower bound in an
attempt to stimulate growth. The US Federal
Reserve’s rate hikes, as well as episodes
AFREXIMBANK  AFRICAN TRADE REPORT 2017  37
of volatility, affected global financial
markets through tighter external financial
flows, declining capital flows and currency
depreciations. Developing economies, many
of which faced structural imbalances, slower
growth and lower commodity prices, were
the most affected by tightening global
liquidity and financing conditions in 2016.
Central bank policy in most developed
economies remained accommodative, with
interest rates falling as monetary authorities
attempted to stimulate growth. In the
Eurozone real short-term interest rates
declined from 0.21 percent in 2014 to –0.02
percent in 2015 to –0.26 percent in 2016.
Real short-term rates in Japan slipped from
0.21 percent in 2014 to 0.17 percent in
2015 to 0.07 percent in 2016. The move to
increase the policy rate by the US Federal
Reserve led the real short-term interest
rate up from 0.12 percent in 2014 to 0.23
percent in 2015 to 0.64 percent in 2016. In
the United Kingdom the rate stayed stable
at 0.54 percent in 2014 and 0.55 percent
in 2015 before declining to 0.49 percent in
2016. Overall, term premiums for sovereign
bonds remained low in most developed
economies and were particularly low in Japan
and Germany in 2015–16.
In response to anticipated monetary
tightening in the United States and to
stimulus by Japanese and European central
banks and in the face of deflation and
growth deceleration, China stepped up
monetary easing in 2015–16 with interest
rate cuts in the one-year benchmark
lending rate. The move was supported by a
reduction in the reserve requirement ratio
38  CHAPTER THREE  AFRICAN TRADE REPORT 2017
for all banks and an additional reduction
for banks that lend to agricultural firms and
small companies.
The continued easing of monetary policy
in Europe, Japan and China; the anticipated
and subsequent rate hikes by the US
Federal Reserve; and low commodity prices
(particularly for oil) contributed to volatility
in equity markets in 2016. US Treasury rates
stayed low for most of 2016 but spiked in
the second half of the year, with increased
prospects of tightened monetary policy.
In the UK bond market competing investor
demand kept credit spreads low at the start
of 2016, a trend reinforced after the Bank
of England’s accelerated bond purchase
programme in the second half. Financing
conditions in China remained accommodative
in a context of growth deceleration.
According to the Bank for International
Settlements Global Liquidity Indicators, in
2015–16 global liquidity conditions started
to tighten for developing economies. A
key yardstick for global liquidity is the US
dollar–denominated debt of non-bank
borrowers outside the United States, which
stood at US$9.7 trillion in December 2015,
down from US$9.8 trillion at end-June
2015, in 2016, while dollar borrowing by
non-banks in developing economies stood
at US$3.2 trillion, also down from US$3.3
trillion in June 2014. This was the first
time since 2009 that dollar borrowing by
non-banks in developing economies had
declined. Cross-border bank lending also
END
AFREXIMBANK  AFRICAN TRADE REPORT 2017  39
showed signs that global liquidity conditions
might have peaked for developing
economies.
Financing conditions in Africa remained
tight owing to limited liquidity caused
by the lingering effect of the end of the
commodity super-cycle and the withdrawal
of many international financial institutions
from Africa. Continuing perception of high
risk for the continent and challenges with
confirmation of letters of credit, among
other factors, meant that access to funds
became more difficult or was at a higher
premium for African entities than for those
from other regions.
4
Chapter Four
Trade and the Trading
Environment
4.1 Global Trade
Growth in world merchandise trade volume
stagnated in 2015, at 2.8 percent, similar
to the rate in 2014. In 2016 it slipped to
1.3 percent, the lowest since 2001. WTO
(2016b) highlights the divergence in volume
and value of trade growth in recent years.
While volume remained flat in 2015, the
value declined 14 percent from 2014
(US$19 trillion) to 2015 (US$16 trillion) and
3.3 percent from 2015 to 2016 (US$15.46
trillion). The variations arose largely from
shifts in exchange rates and persistent
weaknesses in global commodity prices
(particularly for oil), which are priced in US
dollars.
The sluggish growth in volume in 2015–16
was attributable to such factors as financial
market volatility (driven by divergent
monetary policies in developed countries),
wide fluctuations in exchange rates, falling
prices for oil and other primary commodities,
economic slowdown in China and recessions
in other large developing economies such as
Brazil and Russia. The recent trend of growth
in world merchandise trade volume mirroring
that of world gross domestic product (GDP)
was not sustained in 2016: growth in world
merchandise trade volume was much slower
than that of global GDP, reflecting the
continued growth of the global supply chain
model (under which intermediate goods
cross borders many more times than they
did when most stages of production took
place in one country).
AFREXIMBANK  AFRICAN TRADE REPORT 2017  41
Slow growth in the volume of world
merchandise trade also reflected a change
to the regional contribution of trade
growth. Whereas in previous years trade
growth was driven by strong demand in
developing countries, particularly China,
that trend reversed in 2015, as East Asia’s
contribution to global import demand
was lower than Europe’s, owing largely to
growth deceleration in China and other
Asian economies. Hence, recovery in import
demand in Europe and North America
(primarily the United States and Mexico)
compensated for weak demand in developing
countries.
As the negative impact of the sovereign
debt crisis abated, intra-EU trade rebounded
and helped lift European import volumes to
4.3 percent growth in 2015, from 3.2 percent
in 2014, with Europe’s demand accounting
for over 60 percent of the growth in world
merchandise imports in 2015. Germany, the
United Kingdom, France and the Netherlands
remained Europe’s largest importers in 2015.
In 2016 the largest contributors to global
import demand were Asia (49 percent)
and Europe (39 percent). On the supply
side, Europe demonstrated resilience, with
merchandise exports rising 3.7 percent
in 2015, up from 2 percent in 2014. That
resilience was also felt in 2016, when Europe
recorded the smallest decline in exports
(0.3 percent), in contrast to other regions
where the decline was bigger. The largest
decline (16.2 percent) was recorded by
the Commonwealth of Independent States
(WTO 2016b). North American exports grew
marginally, at 0.5 percent, in 2016 (compared
with 4.1 percent in 2014 and 0.8 percent
in 2015) on weakness in US merchandise
exports.
In Asia growth in merchandise exports
rebounded slightly to 1.8 percent in 2016,
from a slump of 1.1 percent in 2015, but
remained far below the 4.3 percent in
2014. The deceleration of merchandise
exports in the region was due largely to
weak performances in China and India—the
region’s two largest economies.
In Brazil and other developing economies,
growth in exports remained weak in 2015–16
on the back of low prices of oil and other
primary commodities, as well as increased
exchange rate volatility. Brazil was hit
by a wave of scandals, a deep recession,
a fiscal crisis, falling export prices and
other domestic challenges, which heavily
undermined the performance of South and
Central America, whose merchandise exports
grew marginally, to 1.3 percent in 2016.
4.2 Global Trading Environment
Celebrating its 20th anniversary in 2015, the
World Trade Organization (WTO) continued
its efforts to resolve issues related to the
stalled Doha Development Agenda. The
42  CHAPTER FOUR  AFRICAN TRADE REPORT 2017
divergence of views on the future of the
Doha Development Round at the 10th
WTO Ministerial Meeting in Nairobi, Kenya,
in December 2015 was a major setback to
multilateralism, which has been contested
by the rise of protectionism over the last
few years. The WTO urged its members
to minimize protectionist measures to
ease conditions for market access, avoid
policies that distort competition and agree
on reforms to global trade rules. At a 2016
meeting of the WTO’s Technical Barriers
Committee, members acknowledged the
need to regulate such products as medical
devices, cosmetics, chemicals and motor
vehicles to ensure the safety and health
of consumers and protection of the
environment but emphasized that regulation
should not create barriers to trade in those
products.
In 2015–16 more countries joined the WTO,
and efforts to enhance its trade facilitation
agenda continued, as did implementation of
capacity-building and training programmes.
The WTO also continued its key role in
resolving trade disputes among members
through its dispute settlement mechanism.
The period also saw negotiations for
regional and preferential trade agreements
among countries and between regions,
including mega-regional trade agreements
such as the Trans-Pacific Partnership and
the Transatlantic Trade and Investment
Partnership.
WTO membership stood at 162 at the end
of 2015, after Seychelles and Kazakhstan
joined, and at 164 at the end of 2016, after
Liberia and Afghanistan joined. Despite the
challenging global environment and the
setback on the Doha Development Agenda,
the WTO’s role is becoming even more
important, with members now accounting
for about 98 percent of global trade,
compared with 91 percent when it came
into being in 1995. The WTO was also in
discussions with many countries seeking
to become members, including (in Africa)
Algeria, Equatorial Guinea, Ethiopia, Libya
and Sudan.1
Trade negotiations culminated at the 10th
Ministerial Conference in Nairobi in December
2015. Six ministerial decisions were adopted
on issues related to agriculture, cotton and
least developed countries, known collectively
as the Nairobi Package. The conference
also revealed divergent views among WTO
members on the future of the Doha Round
and how the negotiations at the WTO level
should continue. The United States and
European Union emphasized that the Doha
Round is over and stressed the need to move
on to new issues, unlike some developing
countries, including India and China, which
remain supportive of concluding the Doha
Round.
However, 53 WTO members agreed to
expand the Information Technology
Agreement, which covers goods with an
estimated annual trade value of US$1.3
1 Forty-three African countries were members
of the WTO at the end of 2016: Angola, Benin,
Botswana, Burkina Faso, Burundi, Cabo Verde,
Cameroon, Central African Republic, Congo,
Côte d’Ivoire, Democratic Republic of Congo,
Djibouti, Egypt, Gabon, The Gambia, Ghana,
Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia,
Madagascar, Malawi, Mali, Mauritania, Mauritius,
Morocco, Mozambique, Namibia, Niger, Nigeria,
Rwanda, Senegal, Seychelles, Sierra Leone,
South Africa, Swaziland, Tanzania, Togo, Tunisia,
Uganda, Zambia and Zimbabwe.
AFREXIMBANK  AFRICAN TRADE REPORT 2017  43
trillion, and concluded a deal to liberalize
trade in an additional 201 high-tech
products in what was the first major tariff-
cutting deal at the WTO since 1996. Eighteen
of the 24 participants in the Information
Technology Agreement began implementing
their tariff commitment—65 percent of tariff
lines fully eliminated since 1 July 2016—and
the remaining participants are on track for
full implementation in the near future.
In 2015 most WTO members continued to
negotiate new regional trade agreements.
The trend towards agreements between
developing and developed trading partners
continued in 2015–16: all WTO members had
a regional trade agreement in force in 2016
after the agreement between Mongolia and
Japan in June was notified.
Broadly, the new regional trade agreements
notified in 2015–16 cover goods and
services, with members from the Asia–
Pacific region involved in six agreements,
members from the Americas region involved
in three and members from Europe, Africa
and the Middle East involved in one each.
In many instances the new regional trade
agreements both broaden and deepen
coverage compared with older ones and
are comprehensive, covering not just
market access for goods and services but
also investment, competition policy, trade
facilitation, government procurement,
intellectual property, electronic commerce,
labour and the environment.
In 2015–16 the WTO continued providing
technical assistance and training
programmes on dispute settlement,
trade-related intellectual property rights,
regional trade agreements, sanitary and
phytosanitary issues, trade in services and
trade policy analysis to member countries. It
also arranged and delivered Geneva-based
and regional advanced trade policy courses.
The regional courses covered Anglophone
and francophone Africa, Asia and the
Pacific, the Caribbean, Latin America, Arab
and Middle East countries, and Central and
Eastern Europe and Central Asia. In addition,
the WTO delivered other specialist courses
on sanitary and phytosanitary measures and
technical barriers to trade for Anglophone
African countries; a regional workshop on
intellectual property and public health for
francophone African countries; a course
for Latin America on managing trade
contingency measures; a seminar on the
Government Procurement Agreement for
Central and Eastern Europe, Central Asia and
the Caucasus; and a seminar on agriculture
for Arab and Middle East countries.
The WTO’s Enhanced Integrated Framework
Steering Committee began work in 2015
on designing Phase Two of the framework,
which aims to help least developed countries
use trade as a tool for growth, development
and poverty reduction. Phase Two started
in January 2016 and will run to 2022. At the
Enhanced Integrated Framework Pledging
Conference in December 2015 on the
sidelines of the 10th Ministerial Conference
in Nairobi, 15 donor countries pledged
US$90 million to the programme.
Negotiations and initiatives to establish
and conclude regional and plurilateral
trade agreements outside the WTO
continued in 2015–16, in light of the
persistent stalemate that has plagued
the Doha Round of negotiations at the
multilateral level. Because the coverage
and depth of regional and plurilateral trade
agreements are tailored to specific trade
and geopolitical interests of the negotiating
parties, they will continue to dominate the
global trade landscape in the coming years.
This is especially true as the global trade
landscape becomes dominated by mega-
regional trade arrangements such as the
Trans-Pacific Partnership, the Transatlantic
Trade and Investment Partnership and
the Regional Comprehensive Economic
Partnership.
The Trans-Pacific Partnership is a trade
agreement under negotiation among
Australia, Brunei, Canada, Chile, Japan,
44  CHAPTER FOUR  AFRICAN TRADE REPORT 2017
Malaysia, Mexico, New Zealand, Peru,
Singapore, Vietnam and the United
States. The 12 countries have a combined
population of about 800 million and account
for some 40 percent of world trade. After
more than five years of negotiations the
Trans-Pacific Partnership was finalized in
October 2015 and signed in October 2016.
However, the recent US threat to withdraw
has raised concerns about its future.
Negotiations towards a free trade
agreement between the European Union and
the United States, which are underpinned
by the Transatlantic Trade and Investment
Partnership, continued in 2015–16. The
Transatlantic Trade and Investment
Partnership is designed to foster growth
and job creation on both sides of the Atlantic
by removing trade barriers. It has three
main pillars: improving market access by
removing customs duties on goods and
restrictions on services, by providing better
access to markets and by making it easier
to invest; improving regulatory coherence
and cooperation by dismantling unnecessary
regulatory barriers; and improving
cooperation in setting international
standards. Despite efforts to conclude a
deal by December 2015, negotiations have
stalled, and the future of the Transatlantic
Trade and Investment Partnership remains
uncertain, especially after the Brexit vote
and the rise of trade-restrictive rhetoric in
the United States.
The 10 countries of the Association of
Southeast Asian Nations,2 along with their
six free trade agreement partners (Australia,
China, Japan, the Republic of Korea, India
and New Zealand) continued negotiations
in 2015–16 to concluding the Regional
Comprehensive Economic Partnership,
a comprehensive free trade agreement
covering goods, services, investment,
competition and intellectual property. Once
2 Brunei, Cambodia, Indonesia, Lao PDR, Malaysia,
Myanmar, the Philippines, Singapore, Thailand
and Vietnam.
concluded, it will be one of the world’s
largest trading blocs, with a population of
more than 3.4 billion and GDP in excess of
US$23 trillion. In 2015 negotiations centred
on tariff concessions and rules of origin.
In 2016 negotiations were completed on
small and medium-size enterprises and on
economic and technical cooperation, setting
a growing momentum for the Regional
Comprehensive Economic Partnership and
raising optimism for successful negotiations
on remaining areas such as goods, services,
investments, intellectual property rights
and movement of labour among member
countries.
The impacts of these mega-regional trade
deals on third countries and regions,
including Africa, are uncertain, as not all
their provisions are fully known, except for
the Trans-Pacific Partnership. However,
African countries that are not part of any
of the three main mega-regional initiatives
are likely to be affected by increased
competition and preference erosion in a
number of markets. In an effort to address
these concerns and promote greater intra-
African trade and integration, in June 2015
member and partner states of the Common
Market for Eastern and Southern Africa,
East African Community and Southern
African Development Community signed
the Tripartite Free Trade Area Agreement,
bringing together 26 countries representing
48 percent of the African Union membership,
51 percent of the continent’s GDP and a
combined population of 632 million.
Under the auspices of the African Union,
African countries launched negotiations
for establishing the Continental Free Trade
Area in 2015. Negotiations continued in
2016 and are expected to be concluded
in 2017. The Continental Free Trade Area
will bring together 54 African countries
with a combined population of more
than 1 billion and a GDP of more than
US$3 trillion, creating a market with the
potential to catalyse intra-African trade and
industrialization.
AFREXIMBANK  AFRICAN TRADE REPORT 2017  45
Apart from granting easier access to Africa’s
large and growing market, the Continental
Free Trade Area will enable its members to
diversify and transform their economies
more quickly through the opportunity to
supply their own import needs. It should also
enhance competitiveness at the industry
and enterprise levels through economies
of scale, continental market access and
better allocation of resources. Moreover, the
enhanced flow of foreign direct investment
could shift focus from natural resources
into industry and manufacturing, given the
Continental Free Trade Area’s market size.
However, the Continental Free Trade Area is
not without challenges, including diversity of
interests at the regional and national levels,
particularly given that disparities in the
continent’s development could create winner
and losers. For this reason the Continental
Free Trade Area should be structured to
ensure that gains for member countries are
broad-based, and policy makers should learn
from free trade agreements already in force
on the continent (UNCTAD 2015a).
4.3 Africa’s External Reserves and
Exchange Rates
The sustained decline in commodity prices
and the consequent reduction in export
revenues put considerable pressure
on African countries’ foreign reserves,
which contracted 13.6 percent from 2014
(US$490.52 billion) to 2015 (US$423.6
billion) and 9 percent from 2015 to 2016
(US$385.56 billion; Table 4.1). Because oil
exporters account for more than 45 percent
of Africa’s total export revenues, the decline
in these countries’ reserves had a steep
impact on the continent’s overall reserves.
All major oil producers in the region—
Angola, Republic of Congo, Equatorial
Guinea, Gabon, Libya and Nigeria—saw their
reserves decline in both 2015 and 2016.
This decline was exacerbated by capital
outflows triggered by local currency
Table 4.1 Reserve Position of African Countries, 2014-16
(in US$ Billions unless otherwise indicated)

Total Reserves (Excl. Gold) Growth Rate (%)† Months of Import Cover
by Reserves
Country Name 2014* 2015* 2016** 2015* 2016** 2014* 2015* 2016**
Algeria 179,62 144,68 114,39 -19,45 -20,94 36,94 32,43 27,11
Angola** 28,13 23,79 22,21 -15,43 -6,64 11,99 14,35 13,57
Benin 0,76 0,67 0,58 -11,84 -13,43 2,50 1,04 0,90
Botswana** 8,32 7,55 7,85 -9,25 3,97 16,21 16,87 16,04
Burkina Faso 0,82 0,66 0,50 -19,51 -24,24 3,48 2,77 1,98
Burundi 0,32 0,14 0,09 -56,25 -35,71 5,46 2,50 1,58
Cameroun** 3,20 3,50 2,56 9,37 -26,86 4,84 5,78 4,00
Cape Varde** 0,51 0,49 0,54 -3,92 10,20 7,18 6,66 7,22
Central Africa Republic** 0,26 0,21 0,21 -19,23 0,00 6,38 3,09 3,40
Chad** 1,08 0,37 0,09 -65,74 -75,68 8,92 4,56 1,41
Comoros** 0,17 0,20 0,18 17,65 -10,00 7,57 8,73 7,27
Congo Dem. Rep. of 1,56 1,22 0,71 -21,79 -41,80 2,54 1,94 0,96
Congo Republic** 4,93 2,22 1,22 -54,97 -45,05 10,78 5,18 2,25
Cote d’Ivoire 0,40 0,34 0,35 -15,00 2,94 0,43 0,34 0,33
Djibouti** 0,39 0,36 0,37 -7,69 2,78 1,10 0,83 0,74
Egypt** 12,00 13,23 19,54 10,25 47,69 2,11 2,23 3,12
Equatorial Guinea** 2,91 1,21 0,55 -58,42 -54,55 12,90 7,35 2,86
Eritrea** 0,21 0,20 0,21 -4,76 5,00 2,21 2,09 2,59
Ethiopia** 2,76 3,73 3,08 35,14 -17,43 1,98 2,42 1,82
Gabon** 2,48 1,87 1,36 -24,60 -27,27 7,10 5,67 3,78
Gambia** 0,16 0,10 0,08 -37,50 -20,00 1,54 1,12 0,75
Ghana** 5,50 5,89 6,10 7,09 3,57 3,73 3,95 3,60
Guinea, The 0,29 0,25 0,39 -13,79 56,00 0,51 0,43 0,60
Guinea, Bissau 0,19 0,18 0,24 -5,26 33,33 4,85 6,52 7,30
Kenya** 7,91 7,55 7,89 -4,55 4,50 5,25 4,15 3,89
Lesotho** 1,07 0,90 0,96 -15,89 6,67 6,94 5,57 5,57
Liberia** 0,50 0,52 0,49 4,00 -5,77 0,47 0,65 0,48
Libya** 89,09 73,67 69,15 -17,31 -6,14 53,97 62,06 58,04
Madagascar 0,78 0,83 1,18 6,41 42,17 2,46 2,57 3,04
Malawi** 0,60 0,69 0,63 15,00 -8,70 4,17 5,04 4,45
Mali 0,12 0,11 0,12 -8,33 9,09 0,33 0,31 0,31
Mauritania** 0,62 0,54 0,49 -12,90 -9,26 1,77 1,88 1,63
Mauritius 3,61 3,96 4,50 9,70 13,64 8,03 10,02 11,25
Morocco 19,67 22,25 24,54 13,12 10,29 5,18 6,83 6,81
Mozambique 3,00 2,41 2,04 -19,67 -15,35 2,89 2,57 1,89
Namibia** 1,18 1,69 1,73 43,22 2,37 1,65 2,37 2,94
Niger 0,96 0,79 0,71 -17,71 -10,13 5,57 5,08 4,18
Nigeria 36,67 30,61 25,84 -16,53 -15,58 6,25 6,30 5,23
Rwanda** 1,07 1,03 1,02 -3,74 -0,97 8,43 7,80 7,08
Sao Tome and Principe** 0,63 0,73 0,62 15,87 -15,07 61,60 81,36 62,33
Senegal 0,19 0,15 0,12 -21,05 -20,00 0,38 0,34 0,25
Seychelles 0,47 0,54 0,52 14,89 -3,70 4,42 4,59 3,94
Sierra Leone** 0,60 0,62 0,59 3,33 -4,84 5,19 5,57 4,21
Somalia — — — — — — — —
South Africa** 44,23 41,62 42,22 -5,90 1,44 4,85 5,07 5,36
South Sudan 0,42 0,23 0,07 -45,24 -69,57 — — —
Sudan** 0,18 0,17 0,17 -5,56 0,00 0,23 0,18 0,17
Swaziland** 0,69 0,55 0,60 -20,29 9,09 4,93 4,93 5,50
Tanzania** 4,39 4,01 3,87 -8,66 -3,49 3,38 3,51 3,06
Togo 0,90 0,74 0,43 -17,78 -41,89 1,37 0,86 0,43
Tunisia 7,24 7,33 5,89 1,24 -19,65 3,32 3,87 2,89
Uganda** 3,32 2,91 3,07 -12,35 5,50 8,59 7,51 7,43
Zambia 3,08 2,97 2,35 -3,57 -20,88 3,81 4,21 2,86
Zimbabwe** 0,36 0,42 0,35 16,67 -16,67 0,88 1,01 0,87
Total 490,52 423,60 385,56 -13,64 -8,98 379,56 385,09 331,26
Average 9,26 7,99 7,27 -9,41 -8,25 14,32 7,41 6,37

Growth rates are Afreximbank Staff calculations.

* Revised   ** Estimates for 2016 based on latest avaibale data   — Not available
Sources: IMF, IFS Database, EIU Country Reports, various issues, IMF IFS Database

46  CHAPTER FOUR  AFRICAN TRADE REPORT 2017

depreciation coupled with interest rate
hikes in the United States. Persistent
socio-political challenges in parts of Africa,
notably Tunisia, Libya, Sudan, South Sudan,
Central African Republic and Mali, increased
uncertainty, heightened risk perceptions
and drove many international investors
to exit. The increased anxiety created by
the environment in these countries also
undermined tourist receipts and foreign
direct investment inflows, hitting the
continent’s foreign reserves in 2015–16.
Owing largely to the decline in Africa’s total
external reserves, average import coverage
fell from 14.3 in 2014 to 7.4 months in
2015 and to 6.4 months in 2016 (see Table
4.1). However, this rate is still above the
International Monetary Fund’s recommended
threshold of 3 months.
Shrinking export earnings caused by falling
commodity prices, rising fiscal and external
imbalances and weak growth in tourism
receipts, combined with growing current
account deficits and persistent socio-
AFREXIMBANK  AFRICAN TRADE REPORT 2017  47
political turmoil in many countries across
the continent, had a sharp dampening
effect on African currencies. Most of
them depreciated against the US dollar
in 2015–16. The currencies of many oil-
exporting and mineral- and metal-exporting
countries were particularly affected by
weak commodity prices and the resulting
dry-up of foreign reserves. For instance,
the Mozambican metical depreciated 39.8
percent against the US dollar in 2015 and
fell a further 50 percent in 2016 owing to
continued weaknesses in commodity prices
and anxieties over the country’s exploding
external debt (Table 4.2). The Ghanaian cedi
continued to slide against the US dollar,
depreciating 18.5 percent in 2015 and 12.2
percent in 2016.
The currencies of major oil-exporting
countries were among the hardest hit by
the fall in oil prices in 2015–16. The Angolan
kwanza depreciated 31.5 percent in 2015
and 22.1 percent in 2016; the fall in oil
exports, which account for more than 90
percent of Angola’s export revenues and
Table 4.2 Africa: Exchange Rate Developments, 2014 - 16
(in US$ Billions unless otherwise indicated)

Percentage change
between
2014 (1) 2015 (2) 2016 (3) (2) & (1) (3) & (2)
Algeria - dinar 87,95 107,15 110,17 21,83 2,81
Angola - kwanza 102,86 135,22 165,08 31,46 22,08
Benin - franc 541,66 603,65 623,38 11,45 3,27
Botswana - pula 9,50 11,26 10,68 18,56 -5,20
Burkina Faso - franc 541,66 603,65 623,38 11,45 3,27
Burundi - franc 1 555,25 1 558,00 1 675,05 0,18 7,51
Cameroon - franc 541,66 603,65 623,38 11,45 3,27
Cape Verde - escudos 90,05 100,99 104,88 12,15 3,85
Central African Republic - franc 541,66 603,65 623,38 11,45 3,27
Chad - franc 541,66 603,65 623,38 11,45 3,27
Comoros - franc 406,24 452,74 467,54 11,45 3,27
Congo, Dem. Rep. of - Congo franc 922,77 925,50 1 076,00 0,30 16,26
Congo, Rep. of - franc 541,66 603,65 623,38 11,45 3,27
Cote d’Ivoire - franc 541,66 603,65 623,38 11,45 3,27
Djibouti - franc 177,99 177,63 177,60 -0,20 -0,02
Egypt - pound 7,15 7,83 18,13 9,43 131,73
Equatorial Guinea - franc 541,66 603,65 623,38 11,45 3,27
Eritrea - nakfa 10,47 10,47 15,28 0,00 45,94
Ethiopia - birr 20,20 21,28 22,70 5,34 6,67
Gabon - franc 541,66 603,65 623,38 11,45 3,27
Gambia - dalasi 43,19 39,36 42,15 -8,89 7,10
Ghana - cedi 3,21 3,81 4,28 18,51 12,22
Guinea - Guinea franc 7 015,10 7 755,00 9 368,00 10,55 20,80
Guinea-Bissau - franc 541,66 603,65 623,38 11,45 3,27
Kenya - shilling 90,52 102,33 102,22 13,04 -0,10
Lesotho - loti 11,55 15,52 13,74 34,37 -11,46
Liberia - Liberia dollar 92,50 86,75 91,00 -6,22 4,90
Libya - dinar 1,31 1,37 1,44 3,86 5,33
Madagascar - Ariary 2 584,70 3 220,00 3 340,00 24,58 3,73
Malawi - kwacha 465,78 615,50 715,76 32,14 16,29
Mali - franc 541,66 603,65 623,38 11,45 3,27
Mauritania - ouguiyas 290,97 309,50 354,00 6,37 14,38
Mauritius - rupee 31,75 35,90 35,85 13,07 -0,14
Morocco - dirham 9,07 9,92 10,11 9,41 1,98
Mozambique - meticals 33,99 47,50 71,23 39,75 49,96
Namibia - namibia dollar 11,55 15,52 13,74 34,37 -11,46
Niger - franc 541,66 603,65 623,38 11,45 3,27
Nigeria - naira 183,00 199,03 304,20 8,76 52,85
Rwanda - franc 688,98 745,00 811,65 8,13 8,95
Sao Tome and Principe - dobra 20 108,62 22 497,50 23 304,50 11,88 3,59
Senegal - franc 541,66 603,65 623,38 11,45 3,27
Seychelles - rupee 13,18 12,07 13,36 -8,40 10,66
Sierra Leone - leone 4 236,48 4 147,31 5 465,00 -2,10 31,77
Somalia - shilling 824,97 618,00 575,71 -25,09 -6,84
South Africa - rand 11,55 15,52 13,74 34,37 -11,46
South Sudan - pound 5,85 6,10 6,48 4,24 6,22
Sudan - pound 5,85 6,10 6,48 4,24 6,22
Swaziland - lilangeni 11,55 15,52 13,74 34,37 -11,46
Tanzania - shilling 1 734,21 2 158,66 2 174,00 24,48 0,71
Togo - franc 541,66 603,65 623,38 11,45 3,27
Tunisia - dinar 1,86 2,03 2,30 9,10 13,25
Uganda - shilling 2 764,94 3 372,68 3 602,00 21,98 6,80
Zambia - kwacha 6,40 11,00 9,96 71,88 -9,47
Zimbabwe - US Dollar* 1,00 1,00 1,00 0,00 0,00

* US Dollar used as official currency since 2009

Sources: Bloomberg, XE website (www.xe.com)

48  CHAPTER FOUR  AFRICAN TRADE REPORT 2017

almost 70 percent of its fiscal revenues,
pushed up fiscal deficits and heightened
issues of macroeconomic management.
Likewise, the Nigerian naira continued to
weaken, depreciating 8.8 percent in 2015
and 52.9 percent in 2016, reflecting oil
price weakness and a consequent decline
in foreign reserves, which compelled the
government to stabilize the reserves and the
currency by stopping dollar sales, imposing
tight capital controls and abandoning
the currency peg in favour of a floating
exchange rate. However, the gap created
between the official and parallel market
rate fuelled the parallel market, and this,
alongside an acute recession in the country,
drove down the naira still further. The
Egyptian pound was even more affected
in 2016, depreciating 131.7 percent after
the Egyptian Central Bank’s decision to
float the currency. In contrast, the CFA
franc depreciated only 3.3 percent, largely
on account of divergent monetary policies
between the European Central Bank and the
US Federal Reserve.
In an even greater contrast, several African
currencies recorded good performance,
reversing the depreciating trend seen
in 2015. Among the best-performing
Figure 4.1 Africa’s merchandise trade, 2005–16 (US$ billion)
800 -
700 -
600 -
500 -
400 -
300 -
200 -
100 -
0-
2005 2006 2007 2008 2009
Exports   
  Imports   
Total Trade - (Right Axis)   
Source: Economist Intelligence Unit, Country Report (various issues), International Monetary Fund Direction of Trade
Statistics database, United Nations Conference on Trade and Development UNCTADStat database and United Nations
Statistics Division database.
were members of the Common Monetary
Area—Lesotho, Namibia, South Africa and
Swaziland—which saw their currencies
appreciate 11.5 percent against the US
dollar in 2016. The Zambian kwacha also
appreciated 9.5 percent against the US dollar
on the back of adjustments in monetary
policy.
4.4 Africa’s Trade
Africa’s total merchandise trade fell 14.3
percent to US$1.03 trillion in 2015, from
US$1.21 trillion in 2014, but rebounded 4.1
percent in 2016, to US$1.08 trillion (Table
4.3 and Figure 4.1). The challenging global
environment in 2015, including the sharp
decline in global commodity prices and the
slowdown of the Chinese economy, were the
main factors.
The dramatic decline in crude oil prices,
which fell below US$30 per barrel in the
fourth quarter of 2015, had heavy effects
on trade performance that year. Especially
hard hit were net oil exporters, notably
Algeria, Angola, Equatorial Guinea, Republic
of Congo, Libya and Nigeria. Nigeria, Africa’s
largest economy and biggest oil exporter,
recorded a 29.3 percent decline in total
1400
1200
1000
800
600
400
200
0
-200
-400
2010 2011 2012 2013 2014 2015 2016
 
Trade Balance - (Right Axis)
AFREXIMBANK  AFRICAN TRADE REPORT 2017  49
 Table 4.3 Africa: Merchandise Trade, 2014-16 (US$ Billion)

Merchandise Exports Growth Rate (%) Share of Merchandise Merchandise Imports Growth Rate (%) Share of Merchandise Total Merchandise Trade Growth Rate (%) Share of Total Merchandise Trade Balance Value
Exports (%) Imports (%) Trade (%) (Exports - Imports)
Africa 2014* 2015* 2016** 14/15 15/16 2014* 2015* 2016** 2014 2015 2016 14/15 15/16 2014* 2015* 2016** 2014* 2015* 2016** 14/15 15/16 2014* 2015* 2016** 2014* 2015* 2016**
Algeria 62,99 34,88 41,96 -44,62 20,29 11,77 8,56 9,92 58,35 53,54 50,64 -8,23 -5,43 8,69 8,55 7,75 121,34 88,42 92,59 -27,13 4,72 10,06 8,56 8,61 4,64 -18,66 -8,68
Angola 58,87 33,98 32,94 -42,29 -3,06 11,00 8,34 7,79 28,14 19,89 19,64 -29,34 -1,23 4,19 3,18 3,01 87,02 53,86 52,58 -38,10 -2,38 7,21 5,21 4,89 30,73 14,09 13,29
Bénin 0,97 0,99 0,96 1,79 -2,47 0,18 0,24 0,23 3,65 7,71 7,71 110,87 0,01 0,54 1,23 1,18 4,62 8,69 8,67 88,02 -0,27 0,38 0,84 0,81 -2,69 -6,72 -6,75
Botswana 6,81 5,91 6,47 -13,22 9,40 1,27 1,45 1,53 6,16 5,37 5,87 -12,82 9,40 0,92 0,86 0,90 12,97 11,28 12,34 -13,03 9,40 1,07 1,09 1,15 0,65 0,54 0,59
Burkina Faso 0,80 1,72 1,38 113,60 -19,69 0,15 0,42 0,33 2,83 2,85 3,03 0,82 6,02 0,42 0,46 0,46 3,63 4,57 4,40 25,75 -3,64 0,30 0,44 0,41 -2,03 -1,14 -1,65
Burundi 0,09 0,11 0,10 22,19 -9,64 0,02 0,03 0,02 0,70 0,67 0,68 -4,50 1,80 0,10 0,11 0,10 0,79 0,78 0,78 -1,53 0,22 0,07 0,08 0,07 -0,62 -0,56 -0,59
Cameroon 5,25 4,25 4,21 -18,99 -1,03 0,98 1,04 1,00 7,93 7,27 7,69 -8,28 5,68 1,18 1,16 1,18 13,18 11,52 11,89 -12,55 3,20 1,09 1,11 1,11 -2,68 -3,02 -3,48
Cape Verde 0,14 0,49 1,34 262,98 174,28 0,03 0,12 0,32 0,85 0,88 0,90 3,52 1,78 0,13 0,14 0,14 0,99 1,37 2,24 39,00 63,38 0,08 0,13 0,21 -0,72 -0,39 0,45
Central African Republic 0,09 0,17 0,16 88,32 -8,99 0,02 0,04 0,04 0,49 0,81 0,74 66,69 -8,99 0,07 0,13 0,11 0,58 0,99 0,90 70,09 -8,99 0,05 0,10 0,08 -0,40 -0,64 -0,59
Chad 2,73 2,10 1,66 -23,03 -21,18 0,51 0,52 0,39 1,45 0,97 0,77 -33,04 -21,18 0,22 0,16 0,12 4,18 3,07 2,42 -26,51 -21,18 0,35 0,30 0,23 1,28 1,13 0,89
Comoros 0,04 0,03 0,03 -17,39 8,09 0,01 0,01 0,01 0,27 0,27 0,30 2,03 8,09 0,04 0,04 0,05 0,31 0,31 0,33 -0,42 8,09 0,03 0,03 0,03 -0,23 -0,24 -0,26
Congo Dem. Rep. of 6,26 5,60 6,56 -10,55 17,23 1,17 1,37 1,55 7,38 7,54 8,84 2,08 17,23 1,10 1,20 1,35 13,64 13,14 15,40 -3,71 17,23 1,13 1,27 1,43 -1,12 -1,94 -2,27
Congo Republic 9,58 5,74 7,25 -40,03 26,21 1,79 1,41 1,71 5,49 5,15 6,49 -6,22 26,21 0,82 0,82 0,99 15,07 10,89 13,75 -27,72 26,21 1,25 1,05 1,28 4,09 0,60 0,76
Côte d’Ivoire 12,81 11,12 11,75 -13,16 5,66 2,39 2,73 2,78 11,07 11,96 12,64 8,05 5,66 1,65 1,91 1,93 23,88 23,08 24,39 -3,33 5,66 1,98 2,23 2,27 1,74 -0,84 -0,88
Djibouti 0,55 0,60 0,70 8,75 16,63 0,10 0,15 0,17 4,24 5,18 6,04 22,05 16,63 0,63 0,83 0,92 4,79 5,78 6,74 20,52 16,63 0,40 0,56 0,63 -3,69 -4,57 -5,33
Egypt 26,69 21,30 21,66 -20,22 1,69 4,99 5,23 5,12 68,19 71,26 75,19 4,50 5,51 10,16 11,38 11,51 94,88 92,55 96,84 -2,45 4,63 7,86 8,95 9,00 -41,50 -49,96 -53,53
Equatorial Guinea 11,03 6,41 7,50 -41,86 16,93 2,06 1,57 1,77 2,71 1,98 2,31 -26,98 16,93 0,40 0,32 0,35 13,73 8,39 9,81 -38,92 16,93 1,14 0,81 0,91 8,32 4,43 5,19
Eritrea 0,49 0,72 0,61 46,94 -15,40 0,09 0,18 0,14 1,14 1,15 0,97 0,88 -15,40 0,17 0,18 0,15 1,63 1,87 1,58 14,72 -15,40 0,14 0,18 0,15 -0,65 -0,43 -0,36
Ethiopia 2,64 2,96 3,24 12,03 9,61 0,49 0,73 0,77 16,74 18,49 20,26 10,47 9,61 2,49 2,95 3,10 19,38 21,44 23,50 10,68 9,61 1,61 2,07 2,18 -14,10 -15,53 -17,03
Gabon 9,31 6,50 7,10 -30,13 9,14 1,74 1,60 1,68 4,19 3,95 4,32 -5,68 9,14 0,62 0,63 0,66 13,50 10,46 11,41 -22,54 9,14 1,12 1,01 1,06 5,12 2,55 2,78
Gambia 0,10 0,11 0,13 5,98 19,55 0,02 0,03 0,03 1,24 1,07 1,28 -13,71 19,55 0,19 0,17 0,20 1,34 1,18 1,41 -12,23 19,55 0,11 0,11 0,13 -1,14 -0,97 -1,16
Ghana 9,88 11,03 12,54 11,67 13,68 1,85 2,71 2,97 17,67 17,89 20,34 1,25 13,68 2,63 2,86 3,11 27,55 28,93 32,89 4,98 13,68 2,28 2,80 3,06 -7,79 -6,86 -7,80
Guinea 2,50 1,96 2,18 -21,37 11,04 0,47 0,48 0,52 6,87 6,97 7,74 1,37 11,04 1,02 1,11 1,18 9,37 8,93 9,92 -4,69 11,04 0,78 0,86 0,92 -4,38 -5,01 -5,56
Guinea, Bissau 0,28 0,29 0,34 2,38 19,16 0,05 0,07 0,08 0,47 0,33 0,39 -29,51 19,16 0,07 0,05 0,06 0,75 0,62 0,74 -17,60 19,16 0,06 0,06 0,07 -0,19 -0,04 -0,05
Kenya 5,77 6,16 6,87 6,69 11,60 1,08 1,51 1,62 18,09 21,81 24,34 20,53 11,60 2,69 3,48 3,73 23,86 27,96 31,21 17,19 11,60 1,98 2,71 2,90 -12,32 -15,65 -17,47
Lesotho 0,82 0,72 0,77 -12,20 6,69 0,15 0,18 0,18 1,85 1,94 2,07 4,86 6,69 0,28 0,31 0,32 2,67 2,66 2,84 -0,37 6,69 0,22 0,26 0,26 -1,03 -1,22 -1,30
Liberia 0,98 0,81 1,02 -16,94 26,50 0,18 0,20 0,24 12,88 9,66 12,22 -24,98 26,50 1,92 1,54 1,87 13,86 10,47 13,25 -24,41 26,50 1,15 1,01 1,23 -11,91 -8,85 -11,20

50  CHAPTER FOUR  AFRICAN TRADE REPORT 2017

Libya 19,52 10,86 10,90 -44,35 0,37 3,65 2,67 2,58 19,81 14,25 14,30 -28,08 0,37 2,95 2,28 2,19 39,33 25,11 25,20 -36,16 0,37 3,26 2,43 2,34 -0,29 -3,39 -3,40
Madagascar 2,22 2,28 2,74 2,56 20,18 0,42 0,56 0,65 3,80 3,88 4,66 1,98 20,18 0,57 0,62 0,71 6,02 6,16 7,40 2,20 20,18 0,50 0,60 0,69 -1,58 -1,60 -1,92
Malawi 1,02 0,92 0,95 -9,44 3,51 0,19 0,23 0,23 1,72 1,64 1,70 -4,85 3,51 0,26 0,26 0,26 2,74 2,56 2,65 -6,55 3,51 0,23 0,25 0,25 -0,71 -0,72 -0,75
Mali 0,46 0,90 0,99 94,89 9,35 0,09 0,22 0,23 4,36 4,28 4,68 -1,96 9,35 0,65 0,68 0,72 4,83 5,18 5,67 7,32 9,35 0,40 0,50 0,53 -3,90 -3,38 -3,69
Mauritania 2,45 2,07 2,17 -15,48 4,54 0,46 0,51 0,51 4,20 3,45 3,60 -17,90 4,54 0,63 0,55 0,55 6,65 5,52 5,77 -17,01 4,54 0,55 0,53 0,54 -1,75 -1,38 -1,44
Mauritius 2,57 2,46 2,49 -4,57 1,17 0,48 0,60 0,59 5,39 4,74 4,80 -12,04 1,17 0,80 0,76 0,73 7,97 7,20 7,28 -9,63 1,17 0,66 0,70 0,68 -2,82 -2,29 -2,31
Morocco 23,60 21,77 24,08 -7,76 10,61 4,41 5,34 5,69 45,61 39,07 43,22 -14,34 10,61 6,79 6,24 6,62 69,21 60,84 67,29 -12,10 10,61 5,74 5,89 6,25 -22,01 -17,30 -19,14
Mozambique 5,25 4,05 4,66 -22,89 15,11 0,98 0,99 1,10 12,46 11,25 12,95 -9,72 15,11 1,86 1,80 1,98 17,71 15,30 17,61 -13,62 15,11 1,47 1,48 1,64 -7,21 -7,20 -8,29
Namibia 6,53 6,72 5,54 2,91 -17,53 1,22 1,65 1,31 8,56 8,56 7,06 0,00 -17,53 1,27 1,37 1,08 15,09 15,28 12,60 1,26 -17,53 1,25 1,48 1,17 -2,03 -1,84 -1,52
Niger 0,79 0,93 1,02 18,25 9,01 0,15 0,23 0,24 2,07 1,87 2,04 -9,73 9,01 0,31 0,30 0,31 2,86 2,80 3,05 -2,02 9,01 0,24 0,27 0,28 -1,28 -0,94 -1,02
Nigeria 93,10 57,39 55,93 -38,36 -2,54 17,40 14,08 13,23 70,41 58,26 59,29 -17,26 1,76 10,49 9,31 9,08 163,52 115,65 115,22 -29,27 -0,37 13,55 11,19 10,71 22,69 -0,88 -3,35
Rwanda 0,44 0,39 0,43 -11,37 9,11 0,08 0,10 0,10 1,52 1,58 1,73 4,01 9,11 0,23 0,25 0,26 1,96 1,97 2,15 0,56 9,11 0,16 0,19 0,20 -1,08 -1,19 -1,30
São Tomé and Principe 0,01 0,01 0,01 -28,23 10,86 0,00 0,00 0,00 0,12 0,11 0,12 -12,27 10,86 0,02 0,02 0,02 0,14 0,12 0,13 -13,98 10,86 0,01 0,01 0,01 -0,11 -0,10 -0,11
Sénégal 2,57 2,32 2,61 -9,78 12,24 0,48 0,57 0,62 6,05 5,23 5,87 -13,47 12,24 0,90 0,84 0,90 8,62 7,56 8,48 -12,37 12,24 0,71 0,73 0,79 -3,48 -2,91 -3,27
Seychelles 0,51 0,47 0,53 -8,11 12,14 0,10 0,12 0,12 1,28 1,41 1,58 10,67 12,14 0,19 0,23 0,24 1,79 1,88 2,11 5,30 12,14 0,15 0,18 0,20 -0,77 -0,94 -1,06
Sierra Leone 1,99 0,50 0,63 -74,94 26,00 0,37 0,12 0,15 1,39 1,34 1,68 -3,85 26,00 0,21 0,21 0,26 3,37 1,83 2,31 -45,69 26,00 0,28 0,18 0,21 0,60 -0,84 -1,06
Somalia 0,81 0,81 0,37 0,00 -54,75 0,15 0,20 0,09 2,45 2,73 1,24 11,43 -54,75 0,36 0,44 0,19 3,26 3,54 1,60 8,59 -54,75 0,27 0,34 0,15 -1,64 -1,92 -0,87
South Africa 91,16 89,29 85,74 -2,05 -3,98 17,04 21,91 20,28 109,37 98,49 94,57 -9,95 -3,98 16,29 15,73 14,48 200,54 187,79 180,31 -6,36 -3,98 16,62 18,17 16,76 -18,21 -9,20 -8,83
South Sudan n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Sudan 4,35 4,37 4,76 0,44 8,95 0,81 1,07 1,13 9,21 11,14 12,13 20,89 8,95 1,37 1,78 1,86 13,56 15,51 16,89 14,33 8,95 1,12 1,50 1,57 -4,86 -6,77 -7,37
Swaziland 2,05 1,99 1,94 -2,93 -2,28 0,38 0,49 0,46 1,68 1,34 1,31 -20,24 -2,28 0,25 0,21 0,20 3,73 3,33 3,25 -10,72 -2,28 0,31 0,32 0,30 0,37 0,65 0,64
Tanzania 4,08 4,21 4,67 3,32 10,78 0,76 1,03 1,10 15,60 13,72 15,20 -12,03 10,78 2,32 2,19 2,33 19,67 17,93 19,87 -8,85 10,78 1,63 1,74 1,85 -11,52 -9,51 -10,54
Togo 1,29 1,76 2,03 36,58 15,25 0,24 0,43 0,48 7,90 10,33 11,91 30,81 15,25 1,18 1,65 1,82 9,19 12,09 13,94 31,62 15,25 0,76 1,17 1,30 -6,61 -8,57 -9,88
Tunisia 15,55 13,53 14,58 -13,02 7,80 2,91 3,32 3,45 26,14 22,72 24,50 -13,09 7,80 3,89 3,63 3,75 41,70 36,25 39,08 -13,06 7,80 3,46 3,51 3,63 -10,59 -9,19 -9,91
Uganda 1,93 1,92 2,04 -0,88 6,61 0,36 0,47 0,48 4,64 4,65 4,96 0,26 6,61 0,69 0,74 0,76 6,57 6,57 7,00 -0,08 6,61 0,54 0,64 0,65 -2,70 -2,73 -2,91
Zambia 9,69 6,39 7,45 -34,04 16,50 1,81 1,57 1,76 9,71 8,46 9,85 -12,88 16,50 1,45 1,35 1,51 19,40 14,85 17,30 -23,46 16,50 1,61 1,44 1,61 -0,01 -2,06 -2,40
Zimbabwe 2,73 2,53 2,20 -7,49 -12,76 0,51 0,62 0,52 4,93 5,00 4,80 1,40 -3,92 0,73 0,80 0,74 7,66 7,52 7,00 -1,77 -6,89 0,63 0,73 0,65 -2,20 -2,47 -2,60
TOTAL 535,15 407,49 422,86 -23,85 3,77 100,00 100,00 100,00 671,46 626,07 653,14 -6,76 4,32 100,00 100,00 100,00 1206,60 1033,56 1075,99 -14,34 4,11 100,00 100,00 100,00 -136,31 -218,57 -230,28

* Revised   ** Estimates for 2016 based on latest avaibale data

Sources: 1) IMF (2016) Direction of Trade Statistics (Database). 2) World Bank (2014) World Development Indicators, (October) 3) EIU, Country Report (various issues). 4) UNCTADSTAT, 2016 5) Afreximbank Staff estimates.
merchandise trade, from US$163.52 billion in
2014 to US$115.65 billion in 2015 (see Table
4.3). This fall was due mainly to the sharp
decline in the country’s oil export revenues:
total merchandise exports fell 38.4 percent
from 2014 (US$93.10 billion) to 2015
(US$57.39 billion).
However, in 2016 the trend reversed, as
growth of the continent’s merchandise trade
rebounded to an estimated 4.1 percent,
largely because prices of major commodities
began to rally on the back of weak supplies in
the agricultural sector and because of robust
demand, which boosted the prices of major
metal and mineral commodities. The total
merchandise trade of oil-importing countries
rose 4.9 percent in 2016 after a decline
of 7.4 percent in 2015. Although growth
remained sluggish over the same period, oil-
dependent African countries saw total trade
climb 1.3 percent, helping lift the continent’s
total merchandise trade to US$1.08 trillion in
2016.
In 2015 the fall in global demand for most
of Africa’s major export commodities
weighed on its total merchandise exports,
which contracted 23.9 percent from 2014
(US$533.15 billion) to 2015 (US$407.49
billion), owing to persistent difficulties in
developed and some developing economies.
The main export commodities include coffee,
copper, gold, palm oil, platinum and rubber.
However, the modest pick-up in prices of
major export commodities in 2016 reversed
the declining trend of total merchandise
exports, which rebounded an estimated 3.8
percent.
Under the challenging global and African
economic environment of 2015, Africa’s five
largest trading economies, which account for
about 60 percent of the continent’s exports,
saw exports shrink: Algeria by 44.62
percent, Angola by 42.3 percent, Egypt by
20.2 percent, Nigeria by 38.4 percent and
South Africa by 2.1 percent in 2015 (see
Table 4.3). However, in 2016 the moderate
improvement in commodity markets helped
AFREXIMBANK  AFRICAN TRADE REPORT 2017  51
two of these countries: export growth was
estimated at 20.3 percent in Algeria and 1.7
percent in Egypt. Though exports continued
to decline in Angola, Nigeria and South
Africa, they decelerated at a much lower rate
in 2016 than in 2015.
Another factor underlying the decline
in Africa’s merchandise exports was the
financing constraint faced by the continent’s
exporters. Perceptions of the African
business environment as highly risky,
coupled with a more stringent regulatory
environment at the global level, prompted
many international banks to scale down
their lending activities across the continent.
This affected trade finance availability in
Africa in 2015–16 because the big players
on the continent are large international
banks, including Citibank, Barclays, HSBC and
Standard Chartered.
Africa’s merchandise imports declined 6.8
percent from 2014 (US$671.46 billion) to
2015 (US$626.07 billion) but recovered an
estimated 4.3 percent in 2016 (to US$653.14
billion). While 2015’s decline may reflect
increasing challenges in accessing trade
financing, other factors may also be at
play, including falling foreign exchange
reserves and rationing, depreciation of local
currencies and drastic adjustment measures.
For instance, as oil prices dropped, the
Algerian government sought to reduce the
country’s import bill by reducing imports
of construction materials such as cement,
ceramic, wood, iron and steel. Algeria’s
imports declined 8.2 percent from 2014
(US$58.35 billion) to 2015 (US$53.54
billion). In South Africa total merchandise
imports shrank almost 10 percent from
2014 (US$109.37 billion) to 2015 (US$98.49
billion), reflecting sharp cutbacks in
imports of electronics and vehicles. In
Nigeria imports fell 17.3 percent from 2014
(US$70.41) to 2015 (US$58.26 billion),
owing to reductions in imports of equipment
related to electronics, plastics, ceramics and
iron. Similar import-restriction measures
were adopted in Angola and other major
oil-dependent countries in Africa to preserve
foreign reserves.
The recovery in merchandise imports in 2016
was supported by strong growth in imports
in Democratic Republic of Congo (17.2
percent), Djibouti (16.6 percent), Guinea
(11 percent), Kenya (11.6 percent), Liberia
(26.5 percent), Morocco (10.6 percent),
Mozambique (15.1 percent), Senegal (12.1
percent), Tanzania (10 percent), Togo (15.3
percent) and Zambia (16.5 percent). This
performance stemmed largely from the
positive effects of still-low oil prices as
the easing of oil import bills continued to
generate savings and windfalls in highly
energy-intensive economies and oil-
importing countries such as Egypt, Morocco
and Kenya. Kenya and Tanzania are still
reaping the fiscal benefits of weak oil prices.
The value of imports rose 5.7 percent in Côte
d’Ivoire, 9.6 percent in Ethiopia, 7.8 percent
in Tunisia and 6.6 percent in Uganda.
The increasing demand for capital goods
in Africa over the past few years (as many
African governments embarked on initiatives
and investment programmes to improve
their processing capacities and diversify
their export base and economy) continued
to put upward pressure on the continent’s
merchandise imports in 2016 and widened
the trade deficit.
Despite the recovery in Africa’s merchandise
trade, reflected by an estimated growth
rate of 4.1 percent in 2016, the continent’s
share of global trade was estimated at only
3.2 percent that year—a slight improvement
over the 3.1 percent of 2015. But much more
needs to be done to integrate Africa into the
global economy.
Africa has historically traded more with
Europe, particularly the European Union,
than with any other region, mostly because
of colonial history. However, in the early
2000s that trend began to change, with
African countries diversifying their trade
relationships towards other developing
52  CHAPTER FOUR  AFRICAN TRADE REPORT 2017
Figure 4.2 Share of Africa’s merchandise
exports to developed and developing
countries (%)
40 -
35 -
30 -
25 -
20 -
15 -
10 -
5-
0-
2014 2015 2016
Share of developed countries
 
Share of developing countries
 
Source: International Monetary Fund Direction of Trade
Statistics database.
regions, as the “Global South” provided
opportunities for expanding trade with other
developing countries. Developed economies,
facing secular stagnation or lacklustre
growth after the global financial crisis,
contributed to this shift, especially given the
Eurozone’s growth slowdown. The share of
Africa’s merchandise exports to developing
countries, which fell to 31.1 percent in 2015
on a slowing Chinese economy, rebounded
to 33 percent in 2016 (Figure 4.2). Africa’s
exports to developed countries have
generally weakened in recent years, though
the share to the European Union within
developed countries grew slightly, from 26.9
percent in 2015 to 28.1 percent in 2016, but
remain far below the 38.4 percent in 2014.
The continued expansion of developing
countries’ share of exports from Africa is
due to intensification of trade relationships
between Africa and Asia, particularly China
and India. Asian countries accounted for
39 percent of African exports in 2016, up
from 32.3 percent in 2014 and 32.7 percent
in 2015 (Table 4.4 and Figure 4.3). China
continued to dominate Africa’s exports
to Asia, although persistent structural
challenges in the country led to a decline
in its share of the continent’s exports from
13.3 percent in 2014 to 11.8 percent in 2015
to 9.3 percent in 2016. The bulk of Africa’s
exports to Asia are primary commodities
related to energy, metals and minerals, and
agricultural raw materials. The dynamic
of trade between the two regions reflects
both contraction in global demand and price
volatility.
The Middle East’s share of exports from
Africa also continued its upward movement,
from 3.16 percent in 2014 to 4.5 percent
in 2015 to 7.1 percent in 2016 (see Table
4.4 and Figure 4.3). The expansion arose
as the continent continued to strengthen
cooperation with the Middle East, especially
with the members of the Gulf Cooperation
Council, through promotion of investments
and through trade and financial initiatives.
Africa’s merchandise exports to the Middle
East are dominated by petroleum gases,
coal, petroleum oils (not crude), gold and
diamonds.
Latin America and the Caribbean was
gradually becoming another important
export destination for Africa, with an
estimated 6.3 percent share in 2014.
However, the wave of economic challenges,
especially the recession that hit Brazil,
the main destination of Africa’s exports in
Figure 4.3 Regional distribution of Africa’s merchandise Exports (%)
60 -
50 -
45 -
30 -
20 -
10 -
0-
Asia European Union
Source: International Monetary Fund Direction of Trade Statistics database and International Trade Centre Database.
AFREXIMBANK  AFRICAN TRADE REPORT 2017  53
the region, put downward pressure on the
share, taking it from 5 percent in 2015 to 2.5
percent in 2016.
Despite Africa’s efforts to diversify its trade
partners, Europe remains the main export
destination, accounting for 42.4 percent of
the continent’s exports in 2016 (compared
with over 50 percent in the early 2000; see
Table 4.4 and Figure 4.3). The economic
difficulties of the Eurozone and Europe
at large weakened the region’s industrial
production capacity and undermined
its demand for primary and industrial
raw commodities, which have been the
main drivers of trade with Africa. France
and Spain have been the main European
destinations of Africa’s exports over the
last three years, but France’s share has
declined to from 6.2 percent in 2014 to 5.9
percent 2015 to 5.2 percent in 2016 and
Spain’s share has declined from 6.5 percent
in 2014 to 6.3 percent in 2015 to 4.9
percent in 2016.
North America remained the third-largest
destination for Africa’s exports in 2016,
behind the European Union and Asia. Its
share of the continent’s exports declined
from 10.2 percent in 2015 to 9 percent in
2016, driven largely by the United States, as
the country continued to reduce imports of
commodities from the continent, especially
crude oil (see Table 4.4 and Figure 4.3).
2014   
  2015   
2016
Latin America & Middle-East North America
Caribbean
 Table 4.4. Direction of Africa’s merchandise trade, 2013–16 (%)

Merchandise exports Merchandise imports Total merchandise trade

2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016
Asia 29.96 32.28 32.65 39.02 32.77 34.93 38.81 45.89 31.44 33.74 36.42 43.13
China 13.31 13.34 11.81 9.26 14.08 16.05 19.44 13.52 13.71 14.81 16.33 11.85
India 5.48 6.52 7.70 5.60 5.30 5.25 4.88 3.38 5.38 5.83 6.03 4.25
European Union 47.39 48.37 47.64 42.40 43.05 42.08 40.30 36.61 45.10 44.91 43.16 38.94
France 6.00 6.20 5.93 5.20 6.03 6.04 6.08 4.45 6.02 6.11 6.02 4.75
Germany 2.96 3.02 3.61 3.51 4.66 4.69 4.59 3.97 3.86 3.93 4.19 3.79
Italy 4.24 4.17 3.75 4.16 3.57 3.67 3.43 2.89 3.89 3.90 3.56 3.39
The Netherlands 4.52 4.93 3.76 2.79 2.76 2.67 2.71 1.75 3.59 3.70 3.14 2.16
Spain 6.00 6.48 6.27 4.87 3.40 3.26 2.94 2.65 4.63 4.74 4.30 3.52
United Kingdom 4.38 3.94 3.50 2.43 2.48 2.42 2.11 1.57 3.38 3.12 2.67 1.91
Latin America & Caribbean 6.11 6.31 4.99 2.50 4.82 4.17 3.86 3.75 5.43 5.13 4.30 3.25
Brazil 3.32 3.46 2.46 1.08 1.60 1.38 1.28 1.21 2.42 2.33 1.76 1.16
Middle East 2.81 3.16 4.52 7.11 10.72 9.83 9.55 8.17 6.99 6.83 7.59 7.74

54  CHAPTER FOUR  AFRICAN TRADE REPORT 2017

Saudi Arabia 0.24 0.33 0.42 0.96 3.06 2.73 2.01 1.33 1.72 1.63 1.37 1.18
United Arab Emirates 0.89 0.98 1.26 1.08 1.47 1.49 1.73 0.58 1.19 1.26 1.54 0.78
North America 13.73 9.89 10.20 8.97 8.64 8.99 7.48 5.57 11.04 9.39 8.54 6.94
United States 8.27 5.94 5.87 5.75 5.55 5.96 4.83 3.55 6.84 5.95 5.26 4.49

Source: International Monetary Fund Direction of Trade Statistics database and International Trade Centre Database.
The US share of Africa’s exports declined
marginally, from 5.9 percent in 2014 to 5.9
percent in 2015 to 5.8 percent in 2016.
Africa has also diversif ied its sources of
imports over the last decade. The share of
Africa’s imports from developing countries
has risen steadily over the last three years
to reach about 38.8 percent in 2016. The
share of imports from Asia has continued
to grow, from 34.9 percent in 2014 to 38.8
percent in 2015 to 45.9 percent in 2016
(Figure 4.4; see also Table 4.4). Africa’s
imports from Asia are dominated by
machinery and electricals and electronics,
which account for over 25 percent of the
continent’s imports from Asia (Figure 4.5).
The expansion of the share of Africa’s
imports from Asia is due largely to low cost
of inputs and technologies, rising investment
and trade finance flows from that region to
the continent.

Figure 4.4. Regional distribution of Africa’s merchandise imports (%)

50 -

45 -

40 -

35 -

30 -
2014   
  2015   
2016
25 -

20 -

15 -

10 -

5-

0-
Asia European Union Latin America & Middle-East North America
Caribbean

Source: International Monetary Fund Direction of Trade Statistics database and International Trade Centre Database.

AFREXIMBANK  AFRICAN TRADE REPORT 2017  55

56  CHAPTER FOUR  AFRICAN TRADE REPORT 2017
The share of Africa’s imports from EU Africa’s imports from North America declined
countries has declined steadily over the last from 9 percent in 2014 to 7.5 percent in 2015
three years, from 42.08 percent in 2014 to 5.6 percent in 2016. Products sourced
to 40.3 percent in 2015 to 36.6 percent from that region are generally machinery
in 2016 (see Table 4.4 and Figure 4.4). and transport-related equipment. Though
However, the European Union remains the share of Africa’s imports from the
an important source of imports for Africa, Middle East has declined steadily over the
most of which are agricultural and mining last three years, to 8.2 percent in 2016, the
equipment and machinery, energy-related region remains a significant source of Africa’s
products, vehicles, and other machinery imports of mineral fuels and bituminous
and high-skilled technological products (see substances, which account for 32.6 percent of
Figure 4.5). the continent’s imports from the region.

Figure 4.5 Africa’s sources of capital goods, by region (%)

35 -

30 -

25 -

20 -

2014   
  2015   
2016
15 -

10 -

5-

0-
Electricals & Electronics

Electricals & Electronics

Electricals & Electronics

Electricals & Electronics

Machinery

Iron & Steel

Machinery

Iron & Steel

Machinery

Asia

Machinery

Iron & Steel

Asia European Union Latin America & North America

Caribbean

Source: International Monetary Fund Direction of Trade Statistics database and International Trade Centre Database.

AFREXIMBANK  AFRICAN TRADE REPORT 2017  57

5
Chapter Five
Commodity Prices
As net exporters of oil and gas and of base
and precious metals or as net importers
of agricultural commodities, excluding
cocoa (for which Africa is the world’s
largest exporter), African economies
remain highly exposed to commodity
markets. According to International
Monetary Fund data (2017), oil and gas
accounted for over 90 percent of exports
from Nigeria and over 40 percent of that
country’s government revenue in 2016.
Four countries in Africa—Egypt, Algeria,
Morocco and Nigeria—accounted for more
than 17 percent of global wheat imports in
the 2015/16 season. Shifts in commodity
fundamentals, which influence prices on
international markets, have wide-ranging
macro implications for the region through
their effects on inflation, the terms of
trade, fiscal balances, financial market
liquidity (including currency and foreign
exchange) and growth prospects.
Except energy, all commodity groups
(agriculture and metals and minerals)
recovered in 2016 after slumping in
2015. The broad Thomson Reuters Core
Commodity Index ended 13 percent higher
in 2016, after a decline of 30 percent in
2015, although prices remained near multi-
year lows. The recovery in commodity
prices emanated largely from the modest
improvement in some developed economies,
including Canada, France and Germany,
and some developing economies, notably
India, which exerted upward pressure on
AFREXIMBANK  AFRICAN TRADE REPORT 2017  59
global demand and pushed up prices in
2016. Commodity markets also benefited
from emerging supply concerns and signs
of a pick-up in demand from China, as it
ramped up infrastructure spending. Further,
markets reacted positively to US President
Donald Trump’s ambitious infrastructure
plans, which they considered potentially
supportive for base metal prices. Finally,
the expansionary monetary policy adopted
by a large swathe of central banks helped
improve market liquidity and buttress
commodity demand and prices.
The bearish trend seen in commodity prices
in 2015 had been heavily influenced by
weak growth in the Eurozone, a strong US
dollar and lower-than-expected growth in
other developed and developing economies,
particularly China. Average nominal prices
contracted 8.4 percent for agriculture and
16.5 percent for metals and minerals in 2015
before making gains of 1.6 percent and 10.9
percent in 2016.
Oil prices were undermined by burgeoning
inventories as supply outpaced global
demand and the US and Canada expanded
shale output. Brent oil markets therefore
contracted sharply, falling by 47.2 percent
in 2015 and again by 15.8 percent in 2016,
although oil prices reacted positively to the
decision by members and non-members of
the Organization of the Petroleum Exporting
Countries to curtail output for six months in
the fourth quarter of 2016.
 Box 5.1: Implications of commodity price shocks for African
economies and policy responses

The end of the commodity super-cycle in More generally for the region, these
2014 once again amplified the dangers challenges emanated mostly from the
of over-reliance on natural resources fact that in 2014–16 most commodities
and commodities in a continent where of export interest to the continent were
oil-exporting countries alone account for subjected to bearish price swings because
over 55 percent of GDP and for more than of weak growth in their core markets,
50 percent of export revenue. The sharp including the Eurozone, a strong US dollar
downturn in commodity prices, especially and lower-than-expected growth in other
that of oil, significantly undermined the developed and developing economies,
continent’s growth performance, with particularly China. Oil markets fell sharply,
a more pronounced impact on natural reflecting burgeoning inventories and
resources and oil-exporting countries tame global demand, while base metal
such as Angola, Nigeria, Republic of Congo prices were undermined by weaker
and Zambia, where oil and base metals seaborne volumes to traditional markets
account for the bulk of export receipts and agricultural prices fell because of a
and fiscal revenues. The sustained return to trend yields after sharply lower
decline in commodities terms of trade output in 2015 as a result of dry El Niño
more generally and oil prices in particular weather conditions.
pushed Nigeria—the top oil-producing
country in Africa—into a recession Africa’s external reserve holdings have
in 2016, the first time in over two gradually but steadily grown over the
decades, with GDP contracting around past two decades, with foreign exchange
1.8 percent. And despite the budgetary reserves recording a growth rate of over
buffer provided to oil-importing 1,300 percent, from US$42 billion in 1995
countries by lower oil prices, most oil- to a peak of US$550 billion in 2013 (Figure
exporting countries have faced other B5.1.1). Elhiraika and Ndikumana (2007)
macroeconomic challenges, including outline several factors that account for
fiscal revenue shortfalls, terms of trade the variations in Africa’s reserves, chief
deterioration and currency volatility. among them, exports, which account for

Figure B5.1.1: Trend in Africa’s foreign reserves and oil prices, 1995–2016

600 - - 120

500 - - 100
Reserves (US$ Billion) – Left Axis
 
400 - Oil Price (US$/bbl) – Right Axis
  - 80

300 - - 60

200 - - 40

100 - - 20

0- -0
1995
1996
1997
1998
1999
2000

2004
2001
2002
2003

2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

Source: World Bank World Development Indicators database, Bloomberg

60  CHAPTER FIVE  AFRICAN TRADE REPORT 2017

64–70 percent of the continent’s total
reserve position. Since Africa’s exports
are depend heavily on natural resources
and commodities, the sustained decline in
the continent’s foreign exchange reserve
position since 2014 appears to be a direct
consequence of the end of the commodity
super-cycle, characterized by plunging
commodity prices, including those for oil
and base metals. Total foreign reserves
declined from US$550 billion in 2013 to
US$487 billion in 2014 and to US$386
billion in 2016.
Notwithstanding the apparent challenges
emanating from over-reliance on natural
resources and oil, there is still optimism
among new and existing oil producers
that resource abundance can contribute
significantly to the continent’s quest
for accelerated growth and structural
transformation. The expectation is
that Africa’s rich endowment in natural
Figure B5.1.2: Impact of low oil prices on GDP growth and total reserves in
Angola and Nigeria
Angola
25,0 40,000
20,0 35,000
30,000
15,0
25,000
10,0
20,000
5,0
15,000
0,0
10,000
5,0
5,000
10,0 0
GDP growth (%) – Left Axis    
  Total Reserves (US$ Mn) – Right Axis
Source: World Bank World Development Indicators database. IMF World Economic Outlook database
AFREXIMBANK  AFRICAN TRADE REPORT 2017  61
resources and commodities and resultant
revenues can deliver substantial
social, economic and infrastructure
improvements; create jobs; and reduce
donor dependency, with potential
trickle-down effects on the continent
as a whole. In this context volatility in
commodity prices continues to present
a challenge for both exporting and
importing countries, especially in terms
of the region’s foreign reserves. Further,
the supply-side effects of reduced
availability and increased costs of oil
as an input create immediate economic
distortions in oil-intensive production
sectors. Again, while increased oil prices
lead to deterioration in the terms of trade
for importing countries, lower oil prices
present fiscal revenue challenges for
exporting countries (though, arguably
with some gains to oil-importing countries
in the form of enhanced savings; Dohner,
1981).
Nigeria
40,0 60,000
35,0
50,000
30,0
25,0 40,000
20,0
30,000
15,0
10,0 20,000
5,0
10,000
0,0
5,0 0
 The impact of sluggish commodity prices
on the foreign reserves position of
African countries is aptly demonstrated
in Zambia, where the steep decline in
the price of copper—for which Zambia is
among the top 10 producing countries
in the world and which accounts for
around 70 percent of the country’s export
revenues—eroded foreign currency
receipts. At the same time, recurrent
power shortages dampened productivity,
and heightened debt servicing costs
exacerbated already weak foreign
exchange levels and adversely impacted
the country’s current account position,
undermining the performance of the
Zambian kwacha, which depreciated
by 71.9 percent, the most among
African currencies in 2015 (although it
subsequently recovered in 2016 as copper
prices picked-up from their seven-year
low).
The impact of low oil prices on African
economies cannot be overemphasized
even though the current term structure
in oil prices suggests some upside
potential in the medium term as the
global economy gathers momentum and
Organization of the Petroleum Exporting
Countries members provide support by
restraining output. Both Angola and
Nigeria suffered sustained declines in
output growth and subsequent worsening
of reserve positions during 2014–16
as a result of the recent oil price shock
(Figure B5.1.2). Before the oil price
shock Angola’s GDP growth increased
6.8 percent in 2013; after the shock
growth declined to 4.8 percent in 2014,
to 3 percent in 2015 and to 0.6 percent
in 2016. In response to unfavourable oil
price developments and falling export
receipts, Angola’s total reserves declined
from US$32 billion in 2013, to US$28.13
billion in 2014, to US$23.79 billion in 2015
62  CHAPTER FIVE  AFRICAN TRADE REPORT 2017
and to US$22.21 billion in 2016, or about
32.2 percent over the period. The slump in
oil prices, combined with the withdrawal
of corresponding banking relationships
by global banks and a devaluation of
the currency, undermined the Angolan
kwanza, causing it to depreciate 31.5
percent in 2015 and over 22 percent in
2016. The Nigerian economy experienced
similar developments, with GDP growth
declining from 6.3 percent in 2014 to
2.7 percent at the end of 2015 and
contracting by 1.8 percent in 2016. Total
reserves also declined, from US$45.42
billion in 2013 to about US$25.84 billion
by the end of 2016, or about 43.1 percent.
Fiscal pressures associated with tight
liquidity on the back of lower oil prices
forced most oil-exporting economies to
resort to stopgap measures to mitigate
the adverse impact of the oil price
decline. In addition to increased external
borrowing, some African governments
(such as Nigeria and Angola) instituted
foreign exchange controls, adopted
restrictions and rationing of access to and
distribution of available foreign currency
in order to insulate their domestic
currencies from speculative attacks and
possible devaluations. In response to the
squeeze on foreign exchange reserves
triggered by the collapse in oil prices, the
Central Bank of Nigeria abandoned the
currency peg to the US dollar in favour
of a floating arrangement, denting the
performance of the Nigerian naira, which
depreciated by 52.8 percent in 2016.
To ensure liquidity availability in order
to sustain economic growth in the
face of contracting global demand,
the Central Bank of Nigeria reduced
reserve ratios for commercial banks
and reduced benchmark rates by 200
basis points. Many governments also
 resorted to fiscal adjustment through
spending cuts to support domestic
currencies against growing inflationary
pressures emanating from unmet foreign
exchange demand. This was the case
for monetary authorities in the Central
African Economic and Monetary Union,
where falling foreign exchange reserves
not only severely dented government
expenditures but also raised the prospect
of a devaluation of the common currency,
the CFA franc, which is pegged to the euro
The end of the commodity super-cycle
also helped refocus policy makers’
attention on long-term measures aimed
at enhancing export diversification
and structural transformation to meet
the challenge of long-term sustainable
growth and currency stability. The
overarching intent of policy makers to
diversify the continent’s export basket
is aptly captured by a statement by the
Office of the President of Nigeria: “Nigeria
succeeded in making itself a mono-
economy over the years due to over-
dependence on oil, and President Buhari
is determined to ensure that it will no
longer remain the same”. The statement
resonates with the African Export-Import
In agricultural markets cocoa prices
were volatile between January 2015 and
December 2016, with two distinct trends.
Between January and December 2015 the
cocoa market was on the ascendency, with
the most sustained bull period in the second
quarter of 2015, as the nearby futures cocoa
contract on the London intercontinental
exchange, the global benchmark for West
African physical cocoa, rallied from £1,901
per tonne to £2,169 per tonne, a 14 percent
gain, boosted by commercial demand and
speculative interest. A more moderate rise
was seen in the fourth quarter of 2015,
AFREXIMBANK  AFRICAN TRADE REPORT 2017  63
Bank’s plan fifth strategic plan, which
strongly advocates for diversifying
African economies and supporting trade,
industrialization and export development
strategies within the continent.
Elsewhere, countries are increasingly
using non-oil resource endowments to
stimulate structural transformation and
industrialization of their economies.
Angola is exploring the development of
its blue economy, leveraging its 1,650
kilometre Atlantic Ocean coastline and
its 330,000 square kilometre exclusive
economic zone as strategic options
for economic diversification. This
strategy considers Angola’s traditional
trade deficit in fishery products and
the thriving market for fish imports
in Nigeria, Egypt, Ghana, Côte d’Ivoire
and Cameroon. Accordingly, the blue
economy is expected to contribute as
much as 3 percent to the country’s
GDP. This strategy aligns strongly
with the African Export-Import Bank’s
commitment to promoting the blue
economy, particularly because poor
logistics remain a key hurdle to African
trade, economic development and
structural transformation.
with prices rallying from £2,132 per tonne
to £2,264 per tonne. That rally generated a
windfall for African producers, who typically
account for over 70 percent of global output
and exports.
The rally was attributable largely to El
Niño weather, the strongest in nearly two
decades according to the Australian Bureau
of Meteorology (2015), which lingered
for most of the 2015/16 season. Dryness
brought about by El Niño curbed rainfall in
top cocoa-exporting countries in West and
Central Africa, principally in Côte d’Ivoire
but also in Cameroon, and slashed yields in
South America, including Brazil and Ecuador,
two important cocoa-growing countries. The
cocoa market recorded a second consecutive
deficit in the 2015/16 season, totalling
almost 200,000 tonnes, according to data
from the International Cocoa Organization
(2017), with global output down nearly 7
percent year on year.
However, as 2015 drew to a close, evidence
of growing cocoa stockpiles in importing
countries, and the anticipation of wetter
La Niña weather over West Africa in the
2016/17 season started to undermine prices.
While the market remained fairly supported
in the first half of 2016, it was unable to
convincingly breach £2,550 per tonne in a
sustained manner, as investors cut back
on their cocoa positions in anticipation of
improved yields. The second half of 2016
saw a precipitous decline in prices, with the
market falling nearly 35 percent from the
year’s high of £2,577 per tonne, closing the
year at £1,732 per tonne and prompting
the rating agency Moody’s to acknowledge
that the price decline would pressure the
economies and fiscal positions of Côte
d’Ivoire and Ghana. The drop was due to a
healthy recovery in output as soil moisture
improved, despite the lingering threat of
harmattan weather in West Africa. Data
from the International Cocoa Organization
(2017) underlines the bearish fundamentals
that dominated the cocoa market in 2016,
with global cocoa output in the 2016/17
season estimated to rise by 15 percent.
The price of coffee recovered, growing
2.27 percent in 2016 after contracting 20.1
percent in 2015. Volatility in most of the
period was influenced by changes in stocks
in producing and importing countries,
which in turn were affected by weather.
Despite the risk of moderately weaker
coffee output in the 2015/16 season,
markets were pressured lower on account
of strong exports from top producer Brazil,
reflecting the large inventories it had built
in the previous season. A weaker Brazilian
64  CHAPTER FIVE  AFRICAN TRADE REPORT 2017
real also put downward pressure on coffee
prices, which are denominated in US dollars.
Prices ended 2015 down 22 percent from a
year earlier for Arabica and 16 percent for
Robusta but recovered strongly in 2016,
with Arabica prices rallying to a high of 172
US cents per pound in November 2016.
The strength in coffee markets in 2016
was on account of the dry El Niño weather
that severely limited global output and,
in particular, yields in Southeast Asia,
especially Indonesia, in the 2016/17 season.
Persistent rainfall in Brazil and sporadic
frost in the country slashed Robusta output
to its lowest level in 12 years, compelling
roasters to scramble for Arabica supplies. In
Africa, too, coffee production in Uganda—
Africa’s largest exporter—fell by almost a
quarter, to 3.2 million bags, far lower than
the initial forecast of 4.2 million bags, owing
to dry weather. Overall, the global balance
stayed tight in 2016/17 and bolstered prices,
although the market suffered a decline in
December, partly on opportunistic selling by
Vietnam. Nevertheless, Arabica and Robusta
prices ended the year 20 percent higher
on the New York exchange and 50 percent
higher on the London exchanges, continuing
the rebound of the average coffee price in
2015–16.
Tea prices were cyclical over the two-year
period, rallying strongly in the first half
of 2015 partly on account of a shortfall in
the market from weak output in Kenya, the
third-largest tea producer, before paring
some of the gains in the second half of
2015 as supply concerns eased. Prices
remained on a downward trajectory, with a
year-on-year decline of 2.6 percent in 2016,
continuing the declines of 4.9 percent in
2014 and 0.37 percent in 2015, reflecting
increased production and supplies from
Bangladesh, India and Sri Lanka, three of
the world’s largest tea producers. This
coincided with a fall in demand stemming
from difficulties in some countries in the
Middle East, especially Iraq, Syria and Yemen,
where the bulk of tea from major producing
countries is exported. The contraction in
global demand was also affected by market
disruptions in Russia, Turkey and Ukraine—
three major export destinations—where
socio-economic difficulties and currency
depreciation undermined imports and
contributed to lower prices.
Rubber prices recovered slightly in 2016,
with growth of 0.73 percent ending two
consecutive years of contraction in 2014
and 2015. The market was well supported
in the first half of 2015 due to strong US
auto sales and investor optimism that
China’s economic stimulus package would
improve the country’s economy and its
demand for commodities. However, a
weakening Chinese economy in the second
half of the year hurt market sentiment. In
addition, maturing trees in Asia boosted
latex production, undermining rubber prices
in 2015. The decline in prices severely
affected rubber farmers in Côte d’Ivoire,
which is the fifth-largest rubber producer
globally and accounts for over 60 percent
of Africa’s rubber exports; many switched
to other crops. However, prices improved
markedly in 2016—particularly in the
second half—fuelled by the recovery in
AFREXIMBANK  AFRICAN TRADE REPORT 2017  65
the crude oil market as members of the
Organization of the Petroleum Exporting
Countries agreed to cut output by 1.2
million barrels per day for six months.
Additionally, floods raised supply concerns
in Thailand, which accounts for 37 percent
of global natural rubber supply, putting
upward pressure on prices in 2016. Further,
according to the Association of Natural
Rubber Producing Countries (Bloomberg,
2017), the global supply of natural rubber
fell 0.6 percent in 2016 while demand grew
3.2 percent, creating an annual deficit of
around 655,000 tonnes.
Cotton prices ended 2015 softer, declining
15.3 percent after an 8 percent decline
in 2014. Despite the market breaking
above 65 US cents per pound at the start
of 2015, it was unable to maintain those
gains as initially supportive fundamentals
turned bearish towards the end of the year.
Although global production for the 2015
season was 119 million bales, relatively
unchanged from the previous year, demand
was sluggish, particularly from China, and
resulted in a build-up of stocks, taking the
global stocks-to-use-ratio from 94 percent
to 100 percent and weighing on prices.
Additionally, global mill use for cotton
remained below its long-run average, as
use remained undermined by low polyester
prices relative to cotton and by teething
problems associated with China’s transition
to new cotton policies.
In 2016 the cotton market rallied strongly,
with average prices rising as much as
5.8 percent. The upturn stemmed from
production shortfalls in key producing
countries, especially India, which suffered
from sharply lower yields on account of poor
soil moisture, and China, where plantings
dropped after a cut to government cotton
price support. Stronger fundamentals in
the cotton market benefited top African
cotton producers, especially Mali, which not
only enjoyed a bumper harvest in 2016 but
also saw renewed demand interest from
China, culminating in an agreement with that
country to build spinning mills to produce
fibre aimed at the Chinese and North African
markets. Global demand remained robust,
creating a disequilibrium between worldwide
supply and demand that helped lift prices in
2016.
Average nominal prices of sugar, which
contracted 5.1 percent in 2014 and 18.9
percent 2015, rebounded strongly in 2016,
gaining 33.3 percent as prospects for weaker
global output emerged in the second half
of the season, reversing hitherto bearish
fundamentals. The rise in prices was also
caused by El Niño weather vagaries—
disruptive rains in Brazil (the world’s largest
sugar producer) and dry weather in South
Asia and Southeast Asia, limiting cane yields.
The sugar rally hurt Africa’s commodity
terms of trade because the continent is a
net importer of more than 10 million tonnes
of sugar, with the largest importers in the
region—Morocco, Algeria, Egypt, Nigeria
and Sudan—the most affected. According
to data from the International Sugar
Organization (Bloomberg, 2016), global
production in 2015–16 trailed consumption
by 6.7 million tonnes, further supporting
prices.
66  CHAPTER FIVE  AFRICAN TRADE REPORT 2017
Soybean prices trended lower in 2015,
ending the year down 20.7 percent (after
an 8.7 percent fall the previous year),
attributable to ample stocks and strong
global production. World production of
soybeans rose by over 13 percent owing
to increased acreage and yields in the
United States, Brazil and Argentina, which
together account for around 80 percent of
production. Although global imports and
consumption also climbed, the increase was
less than that of output, keeping the market
bearish.
However, in 2016 fundamentals in the
market tightened on a fall in global output
of around 2 percent, which contrasted
with rising consumption, particularly from
China. According to the US Department of
Agriculture (2017), global soybean output
fell from 320 million tonnes in 2015 to
313 million tonnes, largely on account of a
sharp drop in Argentina’s production that
was due primarily to floods. China raised its
consumption of soybeans from 87 million
tonnes in 2015 to 97 million tonnes, which
ate into global stocks a little and exerted
upward pressure on prices, which ended the
year 4.1 percent higher.
The maize market recovered in 2016 with
an average nominal price gain of 3.1 percent
after losses of 25.6 percent in 2014 and 11.9
percent in 2015. The contractions stemmed
from comfortable supplies reflecting a
massive build-up in stocks as good weather
improved growing conditions and yields
in China, Argentina, Brazil and the United
States (which together account for more
than 65 percent of global production) and
more than offset the fall in production in the
European Union, where adverse weather
conditions dampened yields and output in
the 2015/16 season. The glut in stocks was
particularly evident in China and the United
States, with end-season stocks rising 20
percent in China and 40 percent in the United
States. Further, good harvests in major
producing but net importing countries in
Africa, including Egypt (which is among the
crop’s top five global importers), Malawi and
Nigeria, more than outweighed the decline in
production in South Africa and was bearish
for prices.
The trend in the average nominal price of
wheat has been to the downside over the
last three years, with a loss of 18.1 percent
in 2016, after previous losses in 2014 and
2015. As a key ingredient in many staple
foods, declining prices have been a boon for
wheat importers in the region, notably Egypt
and Nigeria. The sustained decline in prices
in 2015–16 derived from large excess supply
driven by persistent high stocks and robust
production in several major wheat-producing
countries, including the United States, where
favourable weather conditions encouraged
planting and improved harvests in major
wheat-producing states. According to data
from the US Department of Agriculture
(2017), global wheat output expanded by
13 million tonnes to 728 million tonnes in
the 2014/15 season and again by 7 million
tonnes in the 2015/16 season, while global
consumption struggled to keep pace with
AFREXIMBANK  AFRICAN TRADE REPORT 2017  67
supply, leading to downward pressure on
prices in the 2015/16 season.
Among the group of fats and oils, the
palm oil market followed a pattern similar
to some other agricultural commodities in
2015–16, first slumping in both 2014 and
2015 before recovering strongly, with an
average nominal price gain of 12.4 percent
in 2016. The bearishness of the palm oil
market in 2015 was due to firm global
output, with production up by around 2
million tonnes owing to strong yields in
Indonesia, where production increased to 33
million tonnes from 30.5 million tonnes the
previous season. (Indonesia and Malaysia
together account for over 85 percent of
global output.) This rise helped boost global
stocks by around 500,000 tonnes. However,
production surpluses were reversed in 2016,
pulling the futures market in Kuala Lumpur
25 percent higher over the course of the
year and pushing up import costs in Africa,
which bought more than 5 million tonnes of
palm oil a year in 2015–16. Price momentum
was due to the lagged impact of dry El Niño
weather in Southeast Asia in 2014/15,
which cut palm oil yields in the region even
though production in Africa remained flat.
The supply shortfalls raised fears that
export demand would not be met. Nigeria,
Africa’s largest palm oil consumer, drew
down significantly on its domestic stocks in
the season, with end-season stocks put at
40,000 tonnes, down from 138,000 tonnes
12 months earlier. Additionally, Indonesia’s
decision to raise the amount of palm oil
blended with diesel to 20 percent from 15
percent provided a strong boost to prices in
2016.
The price of copra also trended downward,
culminating in a 14 percent decline in 2015
after a significant gain in 2014. The decline
arose largely from strong production in the
Philippines, Indonesia and India—the largest
suppliers—which increased availability
against weaker demand from major
consuming markets, including the European
Union and the United States. However, in
2016 prices reversed and made strong gains,
with prices in the Philippines rallying as much
as 60 percent, attributable to the growth in
68  CHAPTER FIVE  AFRICAN TRADE REPORT 2017
specialty use of coconut, including coconut
water and coconut sugar, due to their
perceived health benefits. Supply of copra
and coconut oil dropped as farmers opted
for younger coconuts for specialty use,
which pushed coconut oil and copra prices
higher.
The group of metal/minerals commodities
suffered a bearish year in 2015, posting
significant losses owing largely to increased
production capacity, subdued demand led
by a slowing Chinese economy and most
developed economies, and a strengthening
US dollar. Prices subsequently recorded
steep gains in 2016 on the back of emerging
supply concerns, signs of a pick-up in
demand from China and expectations of
strong demand from the United States as
the new administration revealed ideas to
modernize US infrastructure.
Copper prices continued their vertiginous
decline through 2015 and by the end of
the year reached their lowest level since
2009. The descent in prices was due
largely to waning demand from electronic,
construction and automobile industries
in China, reflecting the country’s strategy
to move away from an economy based
on infrastructure investment and heavy
industry to one relying on consumption
and services (IMF 2016). China accounts for
around 50 percent of global copper demand.
Increases in new supply capacity and still
strong stockpiles globally also contributed
to dampening prices. And because copper
prices are denominated in US dollars
on major exchanges, dollar strength
undermined demand. Copper prices had
seemingly bottomed out at the start of 2016
as disruptions to copper projects raised the
risk of a market deficit, but prices dropped
for most of 2016 and failed to reverse owing
to weaker than expected global demand,
resulting in a price loss of 11.7 percent by
year end.
Gold prices were bearish for most of 2015
and finished the year with an 8.3 percent
loss, after a decline of 10.4 percent in 2014.
Still, many investors continued viewing gold
as a “safe haven” asset. The falling price
reflected a strong dollar, which signalled a
gradual revival of the US economy, raised
the prospect of higher interest rates and
undermined the price of the precious
metal. In addition, the agreement between
members of the Eurozone on the Greek debt
crisis—mitigating the risk of a messy default
by Greece and its exit from the Eurozone—
also raised confidence for the bloc and made
gold less attractive. Weak demand from
China, the main consumer of gold, also put
pressure on prices in 2015.
In 2016, though, the market rebounded
strongly, with a price gain of 18.1 percent by
year end, due mainly to a weaker US dollar,
buoyant investor demand and sustained
demand from the Chinese Central Bank,
which prompted renewed investor interest
in Africa’s gold-mining industry and boosted
prospects for intra-African trade. In Ghana,
Africa’s second-largest gold exporter,
the South African mining firm Gold Fields
committed to investing US$1.4 billion in
AFREXIMBANK  AFRICAN TRADE REPORT 2017  69
the Damang mine over eight years, while
Canada’s Roxgold continued to expand its
activities in Burkina Faso, where gold output
in 2016 rose 40 percent year on year.
The price of aluminium fell 10.9 percent
in 2015 from the modest gains realized in
2014. In 2016 the market was unable to
reverse the downward trend and ended the
year with a price loss of 3.7 percent. The
slump in prices in 2015 was due to strong
growth in global production, led by China,
which accounts for about 55 percent of
global aluminium output, combined with
high stockpiles on the market. A strong
US dollar, coupled with the decelerating
Chinese economy and slow pace of growth
in Western Europe and other developed
economies, depressed demand, thus
creating a supply–demand imbalance. Weak
global demand (notably lower than expected
growth in the Chinese economy) in the face
of strong supply and huge stockpiles were
responsible for the price loss in 2016.
Zinc prices also lost steam in 2015, with
a sharp year-on-year decline of 10.6
percent, reversing the significant price gain
made in 2014. The retreat in the price was
driven mainly by subdued global demand
on account of the slowdown in China and
slow infrastructure spending in other
developing economies, partly reflecting
capital outflows. The market recouped most
of these losses in 2016 on improving market
fundamentals in the Chinese economy,
especially in the light of the country’s
continued implementation of massive
stimulus to boost growth. In addition, the
probability of an expansionary fiscal policy
in the United States under President Donald
Trump and the likelihood of a supply deficit
on the market, given production shortfalls,
helped lift prices in 2016.
The nominal prices of lead and tin
maintained their downward trends,
retreating 14.7 percent and 26.6 percent,
respectively, in 2015. Behind the price
declines were waning demand sparked by a
strong US dollar and concerns over growth in
China (the largest producer and consumer of
lead), intensified by that country’s shift from
manufacturing (which requires considerable
use of lead) to a domestic consumption and
service-based economy. Oversupply in the
tin market due to huge stockpiles, built up
in part with the opening up of the economy
of Myanmar—one of the world’s largest tin
producers—along with still-robust exports
from Indonesia depressed tin prices in 2015.
In 2016 lead prices recovered, buoyed
by rising global demand as consumption
in China, Europe and the United States
expanded on increased use in the
automotive and telecommunications
sectors, though this was balanced partly
by a reduction in demand in the e-bike
market resulting from slower sales growth
and competition from lithium-ion batteries,
which are increasingly gaining ground as
off-grid renewable energy-storage solutions.
Global lead demand outpaced production
as mine output was dented by a decline in
production from major producers such as
Australia. Tin prices surged in 2016 on the
70  CHAPTER FIVE  AFRICAN TRADE REPORT 2017
back of a modest recovery in the Chinese
solder market. (Soldering accounts for the
largest share of tin use globally.) Tin prices
were also supported by a sharp decline
in pipeline stocks held by industry users,
according to a survey by the International
Tin Research Institute.
Prices of platinum and silver also continued
their downward movements, with year-
on-year declines of 23.9 percent and 17.6
percent, respectively, in 2015. The price
of platinum fell because of weak demand
from the automotive industry, particularly
in Europe, where diesel cars make up 50
percent of the car market,1 and the rise of
anti-diesel sentiment in Europe in favour of
a cleaner environment. The price of platinum
rebounded in 2016 principally because of a
surge in speculative and investor demand
that was further reinforced by slower mine
1 This was fuelled by a scandal at the car
manufacturer Volkswagen, which fitted its
diesel cars with software that made the engine’s
emissions appear far lower (to regulators) than
they in fact were.
output. Despite the presence of large
above-ground inventories, output from
South Africa, which accounts for 80 percent
of platinum production, fell more than
expected due to difficult wage negotiations
with mine workers. Additionally, strong
auto-catalyst demand and improving global
sentiment contributed to a more bullish
platinum market in 2016.
The decline in silver prices in 2015 came
from a strong US dollar and persistent
weakness in the Chinese economy, which
depressed demand in the face of strong
supply. But like platinum, the metal staged
a strong recovery in 2016, also due to
the recovery in speculative and investor
demand and to a supportive macroeconomic
environment for precious metals, resulting
partly from falling US real interest rates. On
a fundamental basis, silver mine production
fell in 2016 after being stable in 2015,
although stronger scrap supply, triggered by
high prices, and weaker industrial demand
capped the upside.
The downward trend in the nominal price
of crude oil accelerated, with prices falling
47.2 percent in 2015 after an 11.6 percent
END
AFREXIMBANK  AFRICAN TRADE REPORT 2017  71
decline in 2014, as global supply continued
to outpace global demand, weakened by
slower growth in China. The context of
weaker oil prices was exacerbated in Africa
by declining production in 2015–16. US
International Energy Statistics data show
that Africa’s oil output fell around 1 percent
in 2015 and 5 percent in 2016, as rising
Angolan production (in 2015 especially)
was offset by supply disruptions in Nigeria
and Libya, helping reduce Africa’s share of
global oil output from 9.3 percent in 2014 to
8.9 percent in 2015 to 8.4 percent in 2016.
Firm production of shale gas oil in the United
States and Canada and strong oil production
from members of the Organization of the
Petroleum Exporting Countries bloated
global inventories in both crude oil and oil
products, slowing market momentum. And
although prices staged a late recovery in the
fourth quarter of 2016 after the decision
of members and non-members to limit
production, the fall-out from sustained
weak energy prices eroded foreign exchange
reserves for the region’s energy exporters,
created severe terms-of-trade shocks and
stifled growth prospects in Angola and
Nigeria, which also suffered its first recession
in over two decades in 2016.
6
Chapter Six
Rising Protectionism in
Global Trade
The volume of world merchandise trade has
tended to grow faster than world output, yet
after the global financial crisis in 2007/08,
trade and world output have shown similar
sluggish performance. Lacklustre growth of
world trade, 2.7 percent in 2015, continued
in 2016 at 1.3 percent, compared with global
output growth of 3.1 percent—the first time
since 2001 that the two indicators did not
have the same growth rate (WTO 2017).
Weak growth in the volume of merchandise
trade in 2016 is attributable to cyclical
factors as economic activity slowed globally
and deeper structural changes in the
relationship between trade and economic
output.
The most trade-intensive components
of global demand were particularly weak
last year as China continued to rebalance
its economy, growth in Europe remained
anaemic, investment spending slumped in
the United States and commodity prices
stayed lower throughout the year. Against
a weak international trade backdrop, the
temptation to undertake protectionist
measures was high, particularly among
Group of 20 (G20) countries (which include
major industrialized and developing
countries and account for around 85 percent
of world merchandise trade), in the face of
already weak global demand after the global
financial crisis. Amid rising anti-trade and
anti-globalization sentiment, especially in
the United States and Europe, the threat of
protectionism and inward-looking policies
has become more pronounced.
AFREXIMBANK  AFRICAN TRADE REPORT 2017  73
While different from the protectionism of
the 1930s after the Great Depression, which
saw the imposition of large tariff increases,
import quotas and competitive devaluations,
the recent approach reflects creeping
protectionism. One of the reasons for the
decline in traditional protectionist measures
is that, unlike in the 1930s, when the gold
standard limited the ability of countries
to let their exchange rate fall, countries
today can do so when confronted with
macroeconomic challenges. Another reason
is that conventional measures such as tariffs
and quotas, while still widely employed, have
been constrained by disciplines imposed by
the World Trade Organization (WTO), which
since its creation in 1995 has regularly seen
competing trading countries bring cases
to it and respect its rulings. The return to
protectionism in recent years has been
characterized by creeping protectionism
in different guises, using conventional and
non-conventional measures.
The WTO, which concentrates on measures
designed to keep out imports—import
tariffs, anti-dumping duties, countervailing
duties, quantitative restrictions, safeguards,
sanitary and phytosanitary measures,
special safeguards, technical barriers
to trade, tariff-rate quotas, export
subsidies and other regulatory or customs
procedures—reports that the increase in
measures introduced and the slow pace
of eliminating measures saw the stock of
trade-restrictive measures grow by over
380 percent, from 424 measures in 2010 to
Figure 6.1 Stock of trade restriction measures and number of trade restriction measures
removed in Group of 20 countries, October 2010–October 2016

1400 -
Stock of Measures
 
1200 - Measures Removed
 

1000 -

800 -

600 -

400 -

200 -

0-
oct-10

may-11

oct-11

may-12

oct-12

may-13

oct-13

may-14

oct-14

may-15

oct-15

may-16

oct-16
Source: OECD, WTO and UNCTAD (2016) and World Trade Organization Non-Tariff Measures Database.

2,238 measures in mid-October 2016 (WTO
2016a). Trade-restrictive measures by G20
countries grew 290 percent from October
2010 (324 measures) to October 2016 (1,263
measures; Figure 6.1). According to the WTO,
G20 countries introduced an average of 19
trade restrictive measures per month in
2016 and account for about 57 percent of
trade-restrictive measures in place globally.
definition, the Global Trade Alert database
estimates that since 2010, 4,279 measures
that discriminate against foreign commercial
interests have been implemented globally
(Figure 6.2). G20 countries accounted for
around 79 percent of those measures, and
almost 80 percent of those measures were
launched against other G20 countries.

Widening the definition of protectionist Figure 6.2 Number of measures

measures to include non-conventional implemented that discriminate against
protectionist measures results in a foreign commercial interests, 2010–16
significantly higher number of measures and
demonstrates the extent to which creeping 800 -
protectionism has become a feature of
global trade in recent years. Global Trade 700 -

Alert, a monitoring service operated by 600 -

the London-based Centre for Economic
500 -
Policy Research, defines protectionism
more broadly to include any measure that 400 -
discriminates against foreign commercial
300 -
interests. By this definition protectionism
includes government bailouts of domestic 200 -
companies, wage subsidies, export and 100 -
value-added tax rebates, localization
requirements, export taxes, export 0-
2010

2011

2012

2013

2014

2015

2016

credits and financing from state-owned

banks, investment measures, and public
procurement measures. Under this wider Source: Global Trade Alert Database

74  CHAPTER SIX  AFRICAN TRADE REPORT 2017

6.1 Protectionist Measures 6.2 State Aid
by Type
State-aid measures refer to any
Governments have recourse to conventional advantage—granted by public authorities
and non-conventional measures to restrict through state resources on a selective
or protect trade. The most commonly used basis to an organization—that could distort
in recent years were state-aid measures; competition and trade. The definition is
trade-restrictive and defence measures very broad because an advantage can take
such as anti-dumping duties, countervailing many forms but is considered so by virtue
duties and safeguards; and import tariffs. of the characteristic of not being able to be
Other widely used measures to discriminate acquired on the open market.
against foreign commercial interests include
trade finance measures, product standards Examples of state aid include grants to firms
and technical regulations, localization for investment, research and development,
requirements, public procurement measures, employee training and the like; the provision
export incentives and investment measures of loans and guarantees below market
(all of which are discussed in further detail rates; cash injections to, and writing off
below). losses of, public enterprises; sale or lease of
public land or property at discounted rates;
According to Global Trade Alert data, in selective promotion of local companies using
2015–16 the most widely used measures public funding; restrictions on competitive
were state aid, trade defence measures, tendering; discretionary deferral of or
import tariffs and trade finance measures, exemption from tax, social security and
which collectively accounted for 68 percent other payments to the state; legislation
of the measures implemented globally to protect or guarantee market share;
(Figure 6.3). and public funding of privately owned
infrastructure.

Figure 6.3 Measures used to discriminate

In 2015–16 state aid was the most widely
against foreign commercial interests,
used measure to discriminate against foreign
2015–16 (%)
commercial interests. Global Trade Alert
data indicates that 355 such measures were
30% -
implemented over the period, 86 percent
25% -
of them by G20 countries. Russia ranked
20% -
first, with 76 measures, followed by the
15% -
United States (43), Japan (38), France (25)
10% -
and Germany and Italy (20 each). State aid
5% -
covered a range of sectors, from agriculture
0% -
and infrastructure to finance and heavy
Sub-national Government Measures
Other

Investment Measures

Export Incentive

Trade Finance

Trade Defence

Public Procurement

Localisation Requirments

Import Tariff

State Aid

industry. In Africa, Nigeria and South Africa

implemented one state-aid measure each,
with Nigeria providing support to its dry-
season farming programme and South Africa
to its power utility, Eskom.

6.3 Trade Defence Measures

The second most widely used protectionist

Source: Global Trade Alert Database. measure in 2015–16 was trade defence

AFREXIMBANK  AFRICAN TRADE REPORT 2017  75

measures, in the form of anti-dumping anti-dumping measures entering into force
duties, countervailing duties and safeguard were India (54), the United States (23)
measures. and Australia (20). The countries most
frequently targeted by these measures were
An anti-dumping duty is a protectionist China, the Republic of Korea and Japan.
measure—usually in the form of a tariff
following an investigation—that a Metal products accounted for the largest
government imposes on foreign imports share of anti-dumping measures initiated or
that it believes are priced below fair market entering into force (38 percent; Figure 6.5).
value. It can take up to 18 months for an Steel and steel products accounted for about
investigation to be concluded, and the 92 percent of these metal products anti-
initiation of an investigation does not dumping measures.
necessarily lead to the imposition of a trade
measure, but the number of investigations Figure 6.5 Anti-dumping measures by
initiated indicates the likelihood of a rise in product, 2015–16
measures implemented.
10%
In 2016 there was a decline in investigations
7%
initiated and measures implemented,
but recourse to anti-dumping measures 5%
increased after the global financial crisis,
4%
with 2015 seeing the most anti-dumping 38%
measures coming into force (Figure 6.4). In 5%
2015–16, 376 anti-dumping investigations
were initiated by WTO members, and 268
10%
anti-dumping measures entered into force.
21%
G20 countries were responsible for initiating
274 (73 percent) of those anti-dumping
Metals
  Paper
 
investigations and accounted for 188 (70
percent) of those anti-dumping measures Chemicals
  Stone/Plaster
 
entering into force. Plastics and Rubber
  Machinery
 
Textiles
  and Electrical Equipment
The countries initiating the most anti- Other
 
dumping investigations in 2015–16 were
India (77), the United States (66) and Brazil Source: World Trade Organization Non-Tariff Measures
(27), and the countries with the most Database.

Figure 6.4 Number of anti-dumping investigations initiated and anti-dumping measures

entered into force by World Trade Organization members, 2010–16

350 -  
Anti-dumping Investigations Initiated    
Anti-dumping measures entered into force
300 -
250 -
200 -
150 -
100 -
50 -
0-
2010 2011 2012 2013 2014 2015 2016

Source: World Trade Organization Non-Tariff Measures Database.

76  CHAPTER SIX  AFRICAN TRADE REPORT 2017

Chemical products were the second most
frequent target of anti-dumping measures
in 2015–16, accounting for about 21
percent of measures. China was the most
frequent target of measures in this sector,
and India was the most active in initiating
investigations or implementing measures.
Plastics and rubber was the third most
frequently targeted sector, and textiles was
the fourth. Brazil was the main driver behind
the number of measures in the plastics
and rubber sector, and India accounted for
almost 50 percent of the measures initiated
or in force in the textile sector.
The use of anti-dumping measures by
African countries remained limited, at 64
(initiated or entering into force) at the end
of 2016. Three African countries account for
those measures: South Africa (32)1, Egypt
(19) and Morocco (13). In 2015–16 Morocco
was the most active user of anti-dumping
trade measures, initiating six investigations
and entering two measures into force, Egypt
initiated five investigations and entered two
measures into force and South Africa did not
initiate any investigations but entered five
measures into force.
African countries have had few anti-dumping
measures imposed on their exports: 29 at
the end of 2016, 62 percent of which target
South Africa. The WTO members most active
in implementing anti-dumping measures
against African countries are India, Brazil,
the United States and the European Union,
which collectively account for 75 percent
of the total implemented against Africa. In
2015–16 South Africa and Egypt were the
only countries affected by anti-dumping
measures: with two investigations initiated
and five measures entered into force.
1 Trade defence measures, initiated or applied
by or against South Africa are applicable to the
Southern African Customs Union member states:
Botswana, Lesotho, Namibia, South Africa and
Swaziland.
AFREXIMBANK  AFRICAN TRADE REPORT 2017  77
Countries are also increasingly having
recourse to countervailing measures,
with 2015 seeing the most countervailing
measures investigations initiated since the
WTO was set up (Figure 6.6). To encourage
exports, many governments grant subsidies
to exporters, which results in decreased
costs of production that distort global
trade. To counterbalance this, the WTO
allows importing countries to impose a duty,
called a countervailing duty, on imported
goods to raise the price of the subsidized
product and offset its lower price. The use of
countervailing duties therefore provides an
insight into the degree of trade-distorting
subsidies and domestic support provided to
protect exporters.
While 2016 saw a decline in the number
of investigations initiated and measures
implemented, recourse to countervailing
measures has increased since the global
financial crisis. In 2015–16, 51 countervailing
investigations were initiated by WTO
members, and 26 countervailing measures
entered into force. G20 countries were
responsible for initiating over 98 percent
of those countervailing investigations (92
percent of which were against other G20
countries) and accounted for 92 percent of
the measures that entered into force (96
percent of which were against other G20
countries).
The United States was both the leading
initiator of countervailing investigations (35)
and implementer of countervailing measures
(13) in 2015–16. The country most often
targeted was China, with 47 percent of
countervailing investigations initiated and
countervailing measures entering into force.
Metal products, specifically steel, accounted
for the largest share of countervailing
measures, with most countervailing
investigations conducted concurrently with
anti-dumping investigations related to the
same product. Plastics and rubber was the
second most frequently targeted sector,
followed by paper.
Figure 6.6 Number of countervailing investigations initiated and countervailing measures
entered into force by World Trade Organization countries, 2010–16

50 - Countervailing Investigations Initiated    

  Countervailing Measures Entered Into Force
45 -
40 -
35 -
30 -
25 -
20 -
15 -
10 -
5-
0-
2010 2011 2012 2013 2014 2015 2016

Source: World Trade Organization Non-Tariff Measures Database.

The use of countervailing measures by measures in force and initiated2 , recourse

African countries was limited, with no
measures initiated or entering into force
in 2015–16, leaving the stock of measures
initiated by African countries at six, all
by Egypt. In line with the absence of
countervailing measures as a trade remedy
against trading partners, African countries
encountered no measures imposed against
their exports.
Safeguard measures (unlike anti-dumping
and countervailing measures, which target
specific exporters) provide a temporary
emergency measure against imports from
all sources to protect a specific domestic
industry from an increase in imports that
is causing, or threatening to cause, serious
injury to that industry.
Recourse to safeguard measures is used
mostly by developing economies, including
G20 developing countries India, Indonesia,
Russia, South Africa and Turkey. Asian
economies are the most active users,
accounting for some 38 percent of the total
taken worldwide since 2010. While 2016
saw a decline in the number of safeguard
to safeguard measures increased after
the global financial crisis. In 2015–16, 20
safeguard measures entered into force in
WTO member countries, and 28 safeguard
measures were initiated (Figure 6.7). Metal
products—specifically steel—accounted for
the largest share of safeguard measures.
African countries—specifically Egypt,
Morocco, South Africa, Tunisia and Zambia—
accounted for just under 20 percent of the
safeguard measures taken by WTO members
since 2010. In 2015–16 African countries
had five safeguard measures in force and
initiated six safeguard measures.
2 The WTO agreement sets out requirements
for safeguard investigations by national
authorities. The emphasis is on transparency
and on following established rules and
practices. Members have to announce safeguard
investigations, which constitutes an initiation.
Following conclusion of such investigation a
safeguard measure may or may not enter into
force.

78  CHAPTER SIX  AFRICAN TRADE REPORT 2017

Figure 6.7 Number of safeguard measures in force and safeguard measures initiated by
World Trade Organization members, 2010–16

30 - Safeguard Measures in Force

 
25 - Safeguard Measures Initiated
 

20 -

15 -

10 -

5-

0-
2010 2011 2012 2013 2014 2015 2016
Source: World Trade Organization Non-Tariff Measures Database.

6.4 Import Tariff Measures
Although the prevalence of import tariffs
as a protectionist instrument has declined
given the disciplines imposed by multilateral
trade rules under the WTO, they remain an
important and widely used instrument to
protect trade and raise revenues. According
to Global Trade Alert data, since the global
financial crisis, import tariffs have been
the third most popular instrument to
discriminate against foreign commercial
interests, with an estimated 605 import
tariff measures implemented since 2010
(Figure 6.8), 443 (73 percent) of them by
G20 countries.
Global Trade Alert reports that in 2015–
16, 135 import tariff measures were
implemented globally. The leading countries
implementing import tariff measures were
Sri Lanka, the Southern African Customs
Union (comprising Botswana, Lesotho,
Namibia, South Africa and Swaziland), the
United States, Argentina, Pakistan, India,
Turkey and China, and G20 countries as a
group were responsible for 66 percent of
the import tariff measures implemented.
Given that tariff increases affect all countries
because the measures are applied equally,
all African countries—except those that
enjoy preferential market access to certain
markets—were affected.

Other African countries also implemented

Figure 6.8 Number of tariff measures
import tariff measures, notably Egypt, which
implemented, 2010–16
sharply raised customs duties on more
than 300 goods to encourage domestic
120 -
production and curb a ballooning trade
100 - deficit. Angola introduced large hikes in
the Consumption Tax Regulation and the
80 - General Customs Tariff on imported alcohol,
beverages and tobacco. Looking to boost
60 -
local production, Nigeria raised import duties
40 - on luxury goods and consumable items that
have local substitutes, including sports
20 - utility vehicles, alcohol, sugar, rice, cotton
and salt.
0-
2010 2011 2012 2013 2014 2015 2016
The period 2015–16 also saw the removal of
Source: Global Trade Alert Database. tariff preferences under preferential trade

AFREXIMBANK  AFRICAN TRADE REPORT 2017  79

arrangements. The European Commission
announced that effective 1 January 2015 it
would drop China, Ecuador, the Maldives and
Thailand from the list of countries eligible
for tariff preferences under the Generalized
System of Preferences, as the World Bank
has classified them as upper-middle-income
countries. Similarly, effective 1 January 2015
Canada removed 72 countries and territories
from beneficiary status under its General
Preferential Tariff programme, including
Algeria, Botswana, Equatorial Guinea, Gabon,
Mauritius, Namibia, Seychelles, South Africa
and Tunisia, to concentrate the remaining
preferences on the least developed
countries.
6.5 Standards and Technical
Barriers to Trade
With the decline in the use of tariffs, behind-
the-border non-tariff trade measures
such as standards, technical regulations or
conformity assessment procedures have
gained prominence. These non-tariff barriers
often aim to protect human, plant and animal
health—through sanitary and phytosanitary
measures—as well as the environment,
consumers and national security—through
technical barriers to trade—but may also
discriminate against imports and therefore
restrict trade and cause market distortions.
When standards or technical regulations
are not well targeted or scientifically
underpinned, they can be used to unduly
restrict or distort trade. Given that they
often entail high compliance costs, especially
for companies operating in different
markets, producers in developing countries
face considerable challenges in meeting
product standards and overcoming these
non-tariff barriers because they often lack
the capital and the technical and institutional
capacity to comply with emerging standards,
regulations and conformity assessments.
The use of product standards and technical
barriers to trade has become more
80  CHAPTER SIX  AFRICAN TRADE REPORT 2017
pervasive, with the WTO Non-Tariff Measure
database reporting that, since 2010 more
than 18,000 sanitary and phytosanitary and
technical barriers to trade measures have
been notified and more than 4,500 measures
have entered into force. Of these, 382 have
raised specific trade concerns among WTO
members.
In 2015–16, 611 sanitary and phytosanitary
measures and 928 technical barriers to
trade measures were implemented, and 96
specific trade concerns related to sanitary
and phytosanitary and technical barriers
to trade measures were raised at the WTO.
The leading countries having recourse
to sanitary and phytosanitary measures
were the United States (17 percent), the
Philippines (13 percent), Saudi Arabia (10
percent) and the European Union (5 percent).
Only 16 (3 percent) of the sanitary and
phytosanitary measures implemented by
WTO members were from African countries:
Egypt (10), Morocco and South Africa (2
each), and Cabo Verde and Madagascar (1
each).
The leading countries implementing technical
barriers to trade in 2015–16 were the United
States (22 percent), Ecuador (10 percent),
Egypt (9 percent) and China (8 percent).
African countries, led by Egypt, Kenya and
South Africa, accounted for 15 percent of
the technical barriers to trade implemented.
6.6 Trade Finance Measures
Trade finance, especially in the form of
export credits, is the lifeline of the global
trade system. Through borrowing from
the treasury or capital markets, national
export credit agencies use such funds
to finance exports. The Organisation for
Economic Co-operation and Development
and several BRICS3 governments extend
guarantees or long-term export credits to
allow purchasers, particularly in developing
3  Brazil, Russia, India, China and South Africa.
countries, to defer payment for costly
capital goods. Protectionism concerns raised
by export credits arise from the fact that
many governments subsidize these credits
to promote exports. Official support can take
the form of guarantees or insurance for bank
loans or direct government finance, such
as direct loans, interest rate subsidies or
public refinancing. Recognizing the trade-
distortionary impacts of export credits,
Organisation for Economic Co-operation
and Development governments entered into
the Arrangement on Officially Supported
Export Credits, which limits the conditions
under which credits may be granted,
provides for the automatic adjustment of
those conditions in response to changes
in domestic capital markets and foreign
exchange rates and provides for mandatory
exchange of information on credit practices.
Yet recent years have seen an increase
in business conducted outside the
arrangement, with unregulated credit from
Organisation for Economic Co-operation and
Development countries estimated to exceed
US$110 billion and that from China, India,
Russia and Brazil (and to some degree South
Africa) estimated to exceed US$70 billion in
2013. Global Trade Alert data shows that
105 trade finance measures implemented in
2015–16 were discriminatory against foreign
commercial interests, with the leading
countries the United Kingdom, India, Japan,
Russia and Italy. African countries’ use of
such measures in this way is low, with none
recorded in the period, although several
were beneficiaries of export credits from
other countries, especially India, which in
2015–16 extended loans and buyer credits
conditional on inputs and minimum contract
values being sourced from Indian suppliers.
6.7 Other Protectionist Measures
Some of the other most popular measures
in recent years have been localization and
public procurement requirements (see Box
6.1), which aim to favour domestic over
AFREXIMBANK  AFRICAN TRADE REPORT 2017  81
foreign industries. Global Trade Alert data
reveals that more than 535 such measures
have been implemented since 2010, almost a
third since January 2015.
These measures include local content
requirements (requirements to purchase
domestically manufactured goods or
domestically supplied services); subsidies
or other preferences that are received
only if producers use local goods, locally
owned service providers, or domestically
owned or developed intellectual property;
requirements to provide services using local
facilities or infrastructure and the like; and
public procurement measures that either
provide incentives for local procurement or
restrict foreign procurement.
Global Trade Alert data shows that 91
localization and 92 public procurement
requirements were implemented globally
in 2015–16, 96 percent of them by G20
countries. The countries most often
adopting localization requirements were
India, Brazil and the United Kingdom,
and the country most often using public
procurement measures was the United
States, under its Buy-American rules.
6.8 Trade Disputes
Resolving trade disputes is one of the core
activities of the WTO. A dispute arises
when a member government believes that
another member government is violating
an agreement or a commitment that it has
made in the WTO. The WTO has one of the
most active international dispute settlement
mechanisms in the world. Since 1995 more
than 500 disputes have been brought to
the WTO, and more than 350 rulings have
been issued. The most active users of WTO’s
Dispute Settlement Unit since its founding
in 1995, excluding disputes joined as third
parties, are the United States, with 112
complaints and 129 respondent cases, and
the European Union (with 97 complaints and
83 respondent cases).
 Box 6.1: Localization requirements as a protectionist measure and its
implications for Africa
Rising geopolitical and economic
uncertainty across the world is a growing
threat to globalization and international
trade. Anti-trade rhetoric and
protectionist measures are increasingly
prevalent on the global stage, ironically
emerging from the United States and
Europe, previous champions of free
markets and promoters of the free
movement of capital, goods and labour.
In the wake of the 2008 global financial
crisis, there was fear that protectionist
policies, akin to the wave of tariff
escalations launched by the Smoot–
Hawley tariff during the Great Depression
of the 1930s, would sweep the globe.
The Smoot-Hawley tariff bill, which
substantially raised US tariffs on some
890 products, triggered a symmetric
retaliation from targeted countries,
leading to a 60 percent contraction in
global trade between 1929 and 1934.
Instead of pursuing similar actions in the
aftermath of the 2008 global financial
crisis, governments were restrained
in applying traditional quota and tariff
protection measures, perhaps because
of the disciplines imposed by the
multilateral system of trade rules under
the World Trade Organization. Still, some
countries made recourse to creeping
protectionism—non-conventional and
opaque behind-the-border measures
and other non-tariff barriers such
as standards, cumbersome customs
procedures, packaging and labelling
requirements, and domestic subsidies—
to restrict trade and protect domestic
industries.
One measure that has gained prominence
in recent years is localization barriers
(measures that favour domestic industry
82  CHAPTER SIX  AFRICAN TRADE REPORT 2017
at the expense of foreign competitors).1
The European Commission (2014) lists
localization issues as “new significant
barriers”, noting that while many of
the applications of localization barriers
have been around for several years, the
frequency with which they are applied
has been increasing since the 2008 global
financial crisis. According to Stone et al.
(2015), the business community has also
confirmed the rise of trade-restrictive
policies as being a key risk to growth
and global trade. The Global Trade Alert
database reports that 366 localization
requirement measures have implemented
since 2010, with 300 (82 percent) of them
discriminating against foreign commercial
interests (Figure B6.1).
Hufbauer et al. (2013) highlights that
while localization requirements have been
used for different reasons in different
contexts—including to protect infant
industries and to ensure that local firms
can benefit from major investments and
1 Examples include local content requirements
(requirements to purchase domestically
manufactured goods or domestically supplied
services); subsidies or other preferences
that are received only if producers use local
goods, locally owned service providers or
domestically owned or developed intellectual
property, or intellectual property that is first
registered in that country; requirements
to provide services using local facilities
or infrastructure; measures to force the
transfer of technology or intellectual
property; unjustified requirements to
comply with country- or region-specific or
design-based standards; and unjustified
requirements to conduct or carry out
duplicative conformity-assessment
procedures in the country.

Figure B6.1. Number of localization
measures that discriminate against
foreign commercial interests, 2010–16
60 -
50 -
40 -
30 -
20 -
10 -
0-
2010 2011 2012 2013 2014 2015 2016
Source: Global Trade Alert database.
new business created by large foreign
or domestic firms—the recent increase
in localization requirements is driven
primarily by the powerful appeal to
create jobs domestically in a context of
sharpening competition in the global
trade arena and widening income
inequality and declining real wages in
developed economies. Since 2010, Group
of 20 countries have accounted for 89
percent of the localization requirements
that discriminate against foreign
commercial interests.
International Chamber of Commerce
(2013) cautions that while governments
view localization requirements as
beneficial to their domestic economy,
localization policies fundamentally distort
the global trade system, affecting both
the countries against which they are
targeted and the countries implementing
them. In particular, localization
requirements increase the cost structure
of firms and the complexity of doing
AFREXIMBANK  AFRICAN TRADE REPORT 2017  83
business in a country; raise the costs of
key capital goods (especially information
and communication technologies) and
important raw materials and equipment;
reduce choices for businesses and
consumers; discourage innovation
by reducing intellectual property
protection; affect the implementing
country’s reputation and investment
attractiveness; and isolates the country
from the global economy. In other
words, while traditional tariff and quota
measures have not been used as much
as might have been expected in the
aftermath of the global financial crisis,
the increase in localization requirements
presents a new form of beggar-thy-
neighbour trade policy by forcing
production in one country at the expense
of production in other countries, which
may in turn encourage third countries to
pursue their own localization policies and
in the process undermine global trade.
Implications for Africa
The contraction of African trade over the
last few years can be attributed partly
to the rise of protectionist measures,
including localization requirements,
because they constrain global demand
from Africa and other leading African
export markets. By insulating domestic
markets from foreign trade and
investment, localization requirements
negatively affect imports in applying
countries and global value chains.
Localization requirements thus have
the potential to adversely impact global
and African trade both directly, through
limiting access into export markets, and
indirectly, by dampening demand for
Africa’s exports, and could ultimately
undermine ongoing efforts to enhance
the integration of African economies into
global value chains.
 For instance, the application of
localization requirements under the
“Buy American, Hire American” policy
advocated by US President Donald
Trump’s administration may eliminate
some preferences that African countries
enjoy into the US market under the
African Growth and Opportunity Act,
which could directly impact some African
exports, most notably automotive
exports from South Africa and apparel
exports from Kenya, Ethiopia and
Ghana. Another key area in which Africa
may be directly impacted by a “Hire
American” policy is remittance flows.
Given that the United States remains
among the favourite destinations for
African migrants, economic challenges
brought by the policy could affect the
opportunities for and employment
and earnings of the African diaspora,
reducing the flow of funds they can
repatriate to their home countries. For
instance, Nigerians living in the diaspora
sent home approximately US$21 billion in
2015, a significant portion of which came
from the United States. Localization
requirements relating to employment
may make it more difficult for Africans
to migrate to the United States for
employment, which could reduce
remittance flows to the continent. The
indirect impact of localization policies
could be even more pronounced because
Africa would likely suffer a knock-on
effect as other developing economies
such as China and India, which are more
directly impacted by US localization
requirements, reduce demand for Africa’s
export commodities.
Despite these short-term costs, the re-
emergence of localization requirements
84  CHAPTER SIX  AFRICAN TRADE REPORT 2017
may present an opportunity for
Africa to accelerate efforts towards
structural transformation. While
World Trade Organization law—
predominantly through the Agreement
on Trade Related Investment Measures,
the Agreement on Subsidies and
Countervailing Measures and the
General Agreement on Trade in
Services—generally bans measures
that discriminate against foreign
goods or service providers, it
provides flexibility and policy space
for localization requirements. This
includes requiring or incentivizing the
use of domestic service suppliers and
domestic labour. In fact, proponents
of local content point to the fact that
most developed countries employed
protective measures, including local
content requirements, in the early
stages of their industrial development
and argue that if well-defined and
appropriately implemented, localization
requirements could support Africa’s
industrial development and integration
in the global economy (Chang, 2002;
Whitfield et al. 2015). Hansen et
al. (2015) notes that localization
requirements can be used to help
develop weak local industries,
facilitate technology transfer and
thereby close the huge technology
gap between developing countries
and more developed countries.
Indeed, Mozambique, Nigeria, Tanzania
and Uganda have used localization
requirements to break the enclave
nature of extractive industries and
ensure that domestic industries have
the capacity to integrate into strategic
industries in support of local economic
development and growth.
The prevalence of protectionist measures
is seen in the number of trade disputes
brought before the WTO—116 since 2010.
In 2015–16, 30 trade disputes were raised,
led by the United States, Japan, China and
Brazil, which together accounted for half
of the disputes raised. The economies
against which complaints were raised
most often were the United States, China,
the European Union and Indonesia which
together accounted for 60 percent of
complaints.
No African country has brought a dispute
to the WTO as a complainant, but some
have joined disputes as a third party or
been respondents. In 2015–16 the only
African country to join a dispute as a third
party was Egypt (three disputes). The first
dispute related to a complaint brought
by Russia against the European Union
END
AFREXIMBANK  AFRICAN TRADE REPORT 2017  85
regarding cost adjustment methodologies
used to calculate dumping margins in anti-
dumping investigations and reviews. The
second concerned a complaint brought
by the United States against China over
measures through which China appeared to
have provided domestic support in favour of
agricultural producers, in particular, to those
producing wheat, India rice, Japonica rice
and corn. The third related to a complaint
brought by Turkey against Morocco within
the context of anti-dumping measures on
some hot-rolled steel items.
Two African countries were respondents in
2015–16. Turkey raised a complaint against
Morocco over anti-dumping measures on
some hot-rolled steel items from Turkey, and
Pakistan raised a complaint against South
Africa over provisional anti-dumping duties
on Portland cement from Pakistan.
7
Chapter Seven
Trade Facilitation
Despite the slowdown in international trade
after the global financial crisis, trade remains
an important driver of economic growth
and development, especially for developing
countries. High trade and transaction
costs associated with movements of
goods across borders are a key challenge
to competitiveness and prevent countries
from integrating into global value chains
in a world of comparative advantage
where competitiveness is crucial for trade
performance and structural transformation.
In this world, global production is
increasingly fragmented, driven by cross-
border value chains and supply chains,
where outsourcing is increasing rapidly and
tariff rates and other trade barriers have
declined. Hence, reducing trade costs has
become even more important as a source of
competitive advantage.
The evolving pattern of global trade, with
about four-fifths in manufactured goods,
one third in unfinished goods and one third
in intra-company trade (all overlapping
shares), suggests that reducing trade costs
through greater trade facilitation is vital
for Africa’s trade growth. For many African
countries, trade costs arising from trade
procedures and logistical costs often prove
to be far greater impediments to trade than
the tariffs they face in developed countries.
These trade costs loom large in the high
trade costs faced by the continent and
constrain growth in trade volumes. The
United Nations Conference on Trade and
Development estimates that Africa pays 40–
70 percent more on average than developed
AFREXIMBANK  AFRICAN TRADE REPORT 2017  87
countries for the international transport of
its imports (UNCTAD 2015b). Fifteen African
countries are landlocked, making them both
physically and economically more remote
from major world markets, which also feeds
into high trade costs.
Awareness of the costs of burdensome
trade procedures and of the potential gains
from trade facilitation has led to these areas
gaining increased prominence and resulted
in trade facilitation’s inclusion in the Doha
Development Agenda, culminating in the
multilateral Trade Facilitation Agreement in
2013. The World Trade Organization (WTO)
estimates that implementing the agreement
could increase global merchandise exports
by up to US$1 trillion a year and that
developing countries will benefit strongly,
capturing more than half the trade gains
(WTO 2015). Similarly, according to the
Organisation for Economic Co-operation and
Development Trade Facilitation Indicators,
such implementation could reduce worldwide
trade costs 12.5–17.5 percent, with the
opportunities for the biggest reductions
in trade costs accruing to low- and lower-
middle-income countries.
The benefits of trade facilitation measures
are even more pronounced when using a
wider definition of trade facilitation that
includes the logistics and transport costs
associated with cross-border trade and not
just “the simplification and harmonization of
international trade procedures”, with trade
procedures being “the activities, practices
and formalities involved in collecting,
presenting, communicating and processing
data required for the movement of goods
in international trade” as done under the
Trade Facilitation Agreement. Using a wider
conception of trade facilitation that includes
infrastructure and the trade operating
environment, the World Economic Forum
estimates that the benefits of improved
global trade facilitation far exceed those of
further tariff reductions and could increase
global GDP by US$2.6 trillion (4.7 percent)
and global exports by US$1.6 trillion (14.5
percent) (WEF and Global Alliance for Trade
Facilitation 2016), with developing countries
and small enterprises, including those in
Africa, gaining the most.
The African Union has recognized such
benefits, too, and included trade facilitation
as one of the seven priority clusters in
its Action Plan for Boosting Intra-African
Trade. This move and the Trade Facilitation
Agreement—and others, as discussed in
the following sections—will help African
countries embark on trade facilitation
reforms in an effort to reduce trade costs,
ultimately boosting Africa’s trade and
increasing its share in global trade.
7.1 The World Trade Organization
Trade Facilitation Agreement
By end-December 2016, 103 WTO
members had ratified the Trade Facilitation
Agreement, leaving only 7 members needed
to attain the two-thirds required for it to
enter into force.
The Trade Facilitation Agreement is the first
major agreement by WTO member states
since the conclusion of the Uruguay Round
more than 20 years ago. The final agreement
contains provisions for faster and more
efficient customs procedures through
effective cooperation between customs and
other authorities on trade facilitation and
customs compliance issues. It also contains
provisions for technical assistance and
capacity building. The WTO estimates that
88  CHAPTER SEVEN  AFRICAN TRADE REPORT 2017
full implementation would reduce members’
trade costs an average of 14.3 percent, with
most gains accruing to developing countries
globally.
The Trade Facilitation Agreement is made
up of three sections. Section I contains
provisions for expediting the movement,
release and clearance of goods. It clarifies
the relevant articles (V, VIII and X) of the
1994 General Agreement on Tariffs and
Trade. Articles 1–12 of Section I create
obligations for members (Table 7.1).
Section II contains “special and differential”
treatment provisions for developing and
least developed countries aimed at helping
them implement the provisions of the Trade
Facilitation Agreement’s three commitment
categories (A, B and C) for notifying the
implementation of its various provisions.
The categories can be broadly described as
follows. Category A includes provisions that
can be implemented immediately upon entry
into force, category B includes provisions
designated for implementation after a self-
selected transition period and category C
includes provisions that will be implemented
upon acquisition of capacity through
assistance after a self-selected transition
period.
Section III contains provisions that
establish a permanent committee on trade
facilitation at the WTO, requires members
to have a national committee to facilitate
domestic coordination and implementation
of the provisions of the Trade Facilitation
Agreement and sets out a few final
provisions.
In 2015–16, 14 African countries ratified
the Trade Facilitation Agreement.1 In
anticipation of its imminent entry into
force, several African countries started
notifying commitments under the
1 Botswana, Côte d’Ivoire, Gabon, Kenya, Lesotho,
Madagascar, Mali, Mauritius, Niger, Senegal,
Seychelles, Swaziland, Togo and Zambia.
Table 7.1 Summary of World Trade Organization Trade Facilitation Agreement
Article Provisions
1 Publication and availability of
information
2 Opportunity to comment, information
before entry into force and consultation
3 Advance rulings
4 Procedures for appeal or review
5 Other measures to enhance impartiality,
non-discrimination and transparency
6 General disciplines on fees and charges
imposed on or in connection with
importation and exportation
7 Release and clearance of goods
8 Border agency cooperation
9 Movement of goods intended for import
under customs control
10 Formalities connected with importation,
exportation and transit
11 Freedom of transit
12 Customs cooperation
Source: World Trade Organization Trade Facilitation Agreement.
respective categories. At end of 2016, 24
African countries had notified category A
commitments, and 4 had notified category
B and C commitments. Chad, Malawi,
Mauritius and Zambia have notified all their
commitments.
African countries also stand to benefit from
the Trade Facilitation Agreement’s capacity-
building and technical assistance provisions,
which require donor members to provide
assistance and support to developing and
AFREXIMBANK  AFRICAN TRADE REPORT 2017  89
Concerned parties
Executive authority, all border agencies,
trade authority, revenue authority,
agency responsible for information
management
Executive authority, legislative
authority, trade authority, all border
agencies
Customs and other border agencies
All border agencies
All border agencies
Customs and other border agencies
Customs and other border agencies
All border agencies
Customs
All border agencies
All border agencies
Customs
least developed country members for
implementing the agreement. To facilitate
this, the WTO Trade Facilitation Agreement
Facility was formally launched on 22 July
2014 and operational guidelines agreed to in
2015.
To support implementation of the Trade
Facilitation Agreement, the business-led
Global Alliance for Trade Facilitation was
launched in 2015. Bringing together the
Center for International Private Enterprise,
the International Chamber of Commerce
and the World Economic Forum, along with
the governments of Canada, Germany, the
United Kingdom and the United States,
the alliance aims to leverage business
expertise and resources in implementing
customs and border reforms. It will support
Trade Facilitation Agreement–related
projects in 12–15 developing countries by
identifying trade bottlenecks and working
with governments to implement trade-
facilitation reforms and to increase private-
sector awareness of the agreement. As of
December 2016, the alliance was active in
four pilot countries, including Ghana and
Kenya.
7.2 Africa’s Trade-Enabling
Environment
Trade facilitation extends beyond “at the
border” customs and institutional reforms
to cover a myriad of “behind the border”
and “beyond the border” measures, such as
trade-enabling infrastructure, a conducive
business environment, transport and
Figure 7.1 Overall trade-enabling environment, by region, 2014 and 2016
(Enabling Trade Index value)
7- 2014   
  2016
6-
5-
4-
3-
2-
1-
0-
Africa Middle East Latin America North America
and the
Caribbean
Source: African Export-Import Bank calculations based on data from the World Economic Forum and the Global Alliance
for Trade Facilitation.
90  CHAPTER SEVEN  AFRICAN TRADE REPORT 2017
information and communications technology
services to facilitate trade, and domestic
and foreign market access. African countries
perform poorly on international indices
that measure the costs of doing business,
logistics performance and the trade-
enabling environment.2
The Enabling Trade Index, co-published by
the World Economic Forum and the Global
Alliance for Trade Facilitation, assesses
the capacity to facilitate the flow of goods
across borders and to their final destination,
based on the extent to which economies
have the required institutions, policies,
infrastructure and services. Its scope is
thus much broader than trade facilitation as
approached by the WTO’s Trade Facilitation
Agreement, and it provides a more
comprehensive measure of trade facilitation
at the country level. The index, which
2 For example, the World Bank Logistics
Performance Index and Ease of Doing Business
Index, the World Economic Forum’s Global
Competitiveness Index and the Heritage
Foundation’s Index of Economic Freedom.
Europe Eurasia Asia and
Pacific
Figure 7.2 Trade-enabling environment subindices, by region, 2016
(Enabling Trade Index subindex value)

7 -  
Market Access    
Border Administration    
Infrastructure   
Operating Environment

6-

5-

4-

3-

2-

1-

0-
Africa Middle East Latin America North America Europe Eurasia Asia and
and the Pacific
Caribbean

Source: African Export-Import Bank calculations based on data from the World Economic Forum and the Global Alliance
for Trade Facilitation.

covers 34 African economies,3 comprises
four subindices—market access, border
administration, infrastructure and operating
environment.
According to the Enabling Trade Index, the
best-performing region at facilitating trade
in general was North America, followed
by Europe and the Asia and Pacific region
(Figure 7.1). Africa was the third best on the
market access subindex (Figure 7.2), but its
overall score was weighed down by its scores
on the other three subindices.
Despite Africa’s poor overall performance,
all but 4 of the 34 African countries showed
gains between 2014 and 2016, with
3 Algeria, Benin, Botswana, Burundi, Cameroon,
Chad, Côte d’Ivoire, Democratic Republic of
Congo, Egypt, Ethiopia, Gabon, The Gambia,
Ghana, Kenya, Lesotho, Liberia, Madagascar,
Malawi, Mali, Mauritania, Mauritius, Morocco,
Mozambique, Namibia, Nigeria, Rwanda, Senegal,
Sierra Leone, South Africa, Tanzania, Tunisia,
Uganda, Zambia and Zimbabwe.
Africa—after the Asia and Pacific region—
showing the second-best improvement on
the overall index. The top-ranked African
countries on the overall index in 2016 were
Mauritius, Morocco, Rwanda, South Africa
and Botswana, while the countries with the
greatest gains between 2014 and 2016 were
Liberia, Tanzania, Ethiopia, Ghana and Benin.
Liberia was the outstanding performer
owing largely to improvements in market
access after its accession to the WTO in
2016.
7.2.1 Market Access
Market access measures the extent and
complexity of a country’s tariff regime, as
well as tariff barriers faced and preferences
enjoyed by a country’s exporters in foreign
markets. Among developing regions, Latin
America and the Caribbean, performs
the best on the market access subindex,
followed by Africa, whose performance
varies widely depending on whether
domestic or foreign market access is being
considered.

AFREXIMBANK  AFRICAN TRADE REPORT 2017  91

Domestic market access looks at the
level and complexity of a country’s tariff
protection as a result of its trade policy
and includes average tariffs applied, the
share of goods imported duty free and
the complexity of the tariff regime. African
economies perform poorly in this area, with
only Mauritius, Botswana, Lesotho and
Tunisia in the top 75 countries for domestic
market access. Between 2014 and 2016 the
African countries that recorded the biggest
improvements were Lesotho, Tunisia, Gabon,
Morocco and Mozambique. Those going in
the other direction were Cameroon, Kenya,
Rwanda, Ghana, Uganda, Malawi, Ethiopia
and South Africa.
African countries fared better on access to
foreign markets, given their participation
in the WTO, bilateral trade agreements and
the preferential access of many African
countries to developed country markets.
In 2016, 7 African countries were ranked
among the top 10: Lesotho, Uganda,
Madagascar, Malawi, Mozambique, Tanzania
and Mauritius. Between 2014 and 2016 the
countries with the biggest improvements
were Liberia, Senegal, Lesotho, The Gambia
and Mali. Countries showing a worsening
trend were Chad, Gabon, Mauritius,
Mauritania, Tunisia and Zimbabwe.
7.2.2 Border Administration
In 2016 Africa was the weakest region
for efficiency and transparency of border
administration and costs associated with
the import and export of goods. Still,
some African countries improved certain
aspects between 2014 and 2016. In 2016
documentation and border clearance for
imports into Botswana required only eight
hours on average—on a par with the
Republic of Korea and the United States—
while Kenya recorded a steep reduction
in the cost of import documentation
clearance procedures, from US$550 to
US$115 (WEF and Global Alliance for Trade
Facilitation 2016). The best-performing
African countries for border administration
92  CHAPTER SEVEN  AFRICAN TRADE REPORT 2017
in 2016 were Botswana, Morocco, Rwanda,
South Africa, Mauritius and Kenya, and
the countries that recorded the biggest
improvements between 2014 and 2016 were
Ghana, Kenya, Tanzania and Mali.
7.2.3 Infrastructure
Africa’s trade is hampered by a lack of
transport infrastructure and the poor
quality of transport services within countries
and across borders. In 2016 Africa was the
worst-performing region on this subindex.
The countries that ranked highest for
infrastructure in 2016 were South Africa,
Morocco, Namibia, Mauritius, Egypt, Côte
d’Ivoire and Botswana, and the countries
that improved the most between 2014 and
2016 were Côte d’Ivoire, Ethiopia, Gabon,
Algeria and Kenya. The countries that ranked
highest for transport services in 2016 were
South Africa, Kenya, Egypt, Rwanda and
Botswana, and the countries that made
the greatest strides in improving transport
services were Tanzania, Botswana, Egypt,
South Africa, Uganda and Kenya.
African countries also lag behind in the
use of information and communications
technology infrastructure for trade, with
only Mauritius, South Africa, Morocco and
Tunisia ranking in the top half of countries
on this measure. Still, apart from Egypt,
Zimbabwe and Mauritania, all African
countries improved between 2014 and 2016,
particularly Ghana, Tunisia, Algeria, Rwanda,
Côte d’Ivoire and Nigeria.
7.2.4 Operating Environment
In 2016 Africa’s operating environment
for supporting the capacity of companies
to export, import, trade and transport
merchandise had generally improved from
2014, to differing degrees by country.
The African countries with the best trade-
facilitating operating environments were
Rwanda, Mauritius, Morocco, Zambia
and South Africa. African countries that
improved on this metric between 2014 and
2016 included Côte d’Ivoire, Ghana, Algeria,
Rwanda and Benin.
7.3 Africa’s Trade Facilitation
Initiatives
In addition to the reforms at the multilateral
and bilateral levels, initiatives to facilitate
trade have also been pursued at the
national and regional levels. For example, in
December 2016 the African Export-Import
Bank partnered with the African Union
to host the first Africa Trade Facilitation
Forum in Addis Ababa, Ethiopia, which
brought together policy makers, the private
sector and senior representatives from
stakeholder groups to share experiences
Box 7.1: The African Export-Import Bank’s Fifth Strategic Plan:
IMPACT 2021 – Africa Transformed
Since the African Export-Import Bank
was established in 1993, it has adopted
strategic planning to advance its
medium- and long-term corporate goals
and has successfully used five-year
rolling strategic plans as a guide towards
achieving them. In December 2016 the
Bank’s Board of Directors approved the
fifth strategic plan, IMPACT 2021—Africa
Transformed, covering 2017–21.
In developing a strategic plan, the
Bank considers several internal and
external factors. The primary internal
consideration is to conform to the vision
of the founding fathers as specified in
the Bank’s charter—that is, to facilitate,
promote and expand extra- and intra-
African trade, following a thorough
assessment of the Bank’s capacity.
Another critical internal consideration
is the Bank’s unique institutional setup,
which requires it to deliver financial
value to its diverse shareholder base,
AFREXIMBANK  AFRICAN TRADE REPORT 2017  93
and good practices on how “Africa can
trade with Africa”. The forum explored
ways to overcome restrictions to trade and
imports across Africa, such as non-tariff
barriers, and looked at reducing the cost
of trade and the future of trade facilitation
in Africa; connecting African companies to
regional and international markets through
trade facilitation; implementing the Trade
Facilitation Agreement; facilitating transport
corridors; financing trade facilitation in
Africa; and benchmarking improvements.
The Ethiopia–Djibouti railway modernization
project, also known as the Addis Ababa–
Djibouti railway, saw its first freight service
in November 2015. The 752.7 kilometre
electric line is the first modern electrified
while achieving its trade development
objectives.
A key external consideration shaping the
2017–21 strategic plan is the growing
significance of intra-African trade. In view
of recent regional and global economic
developments, there is increased urgency
to boost the promotion and financing
of intra-African trade. There is also
strong political will across the continent
to spearhead these efforts, with intra-
African trade a top priority at the highest
level of the African Union.
Another external consideration is the
difficulties that some African economies
have faced in recent years from the
sustained decline in commodity terms
of trade and slower economic growth
in the region’s major trading partners,
which have demonstrated the need
for industrialization and export
manufacturing as well as structural
 transformation of African economies.
The Bank’s strategy takes advantage of
the rising cost of light manufacturing in
Asia and other developing regions, which
have created an opportunity for Africa
to assume an important role in labour-
intensive light manufacturing and become
hosts to delocalized Asian factories.
Other external factors include the rising
middle class in Africa, the withdrawal of
correspondent banking services from
Africa, the continued poor state of
trade-facilitating infrastructure across
the continent, the growing importance
of the Chinese currency (renminbi) in
international trade, and the African
diaspora’s increased role in the context
of the region’s growth and economic
development.
In view of the above considerations,
as well as the Bank’s comparative
advantage, the 2017–21 strategic plan
was anchored on four key strategic pillars:
Intra-African Trade, Industrialization
and Export Development, Trade Finance
Leadership, and Financial Soundness and
Performance.
Under the Intra-African Trade pillar,
the Bank will aggressively promote and
finance intra-African trade and trade with
the African diaspora. The strategy for
intra-African trade is conceived around
three themes: create, connect and deliver,
with measure as an ancillary theme
(CCDm).1 The philosophy behind CCDm
is that building solid export-production
capacities as well as domestic and
continental supply chains will facilitate an
increase in the flow of goods and services
1 The Bank’s Board of Directors approved a
separate Intra-African Trade Strategy in
April 2016.
94  CHAPTER SEVEN  AFRICAN TRADE REPORT 2017
across borders in Africa. The measure
ancillary theme introduces monitoring
and measurement mechanisms. CCDm
will bring together key players in intra-
African trade—farmers, processors,
manufacturers, tradable services
providers, traders, financiers, logistics
providers, consumers and policymakers.
The Industrialization and Export
Development pillar is framed around
three themes: Catalyse, Produce and
Trade (CPT). Under the CPT framework
the Bank intends to act as a catalyst for
industrialization and export development
in Africa by directly addressing the
constraints to industrialization by
facilitating the production of value-added
exports and services, while ensuring
that the produced goods and services
are traded. Interventions under the
Industrialization and Export Development
pillar will thus focus on supporting the
development of the agro-processing,
light manufacturing and tradable service
sectors.
The Trade Finance Leadership pillar will
see the Bank extend its leadership in
trade finance by expanding interventions
in critical trade finance products and by
creating new products and initiatives.
The objective is to fill the gap resulting
from the exit of international banks from
Africa trade finance (stemming from
high compliance costs and economic
uncertainty). The Bank’s interventions
will be provided through financial
instruments—focused on providing
trade services; trade finance (short-term
products, including import and export
finance); specialized products (including
forfaiting and supply chain finance);
and guarantees—and non-financial
instruments—focused on improving
the capacity of Africans in trade finance
and trade negotiations and initiatives
aimed at making Africa-related trade
information widely available in a cost-
effective manner.
The Financial Soundness and
Performance pillar recognizes that to
have a meaningful impact on African
trade, the Bank must be big enough
and financially sound enough to earn
the continued confidence of its clients
and attain its strategic objectives. The
Bank plans to be adequately capitalized
over the course of its 2017–21 strategic
plan and will seek to improve its credit
ratings. It will also introduce innovative
initiatives aimed at achieving a source of
permanent capital and improving overall
capital management. The Bank intends to
achieve improved and strong earnings,
secure sufficient liquidity (reducing over-
reliance on non-African sources), develop
AFREXIMBANK  AFRICAN TRADE REPORT 2017  95
a robust loan portfolio and adopt
sound risk management and corporate
governance processes. Furthermore, the
Bank’s Central Bank Deposit Programme
will be deepened, and the Bank’s risk
management capability will continue to
be strengthened to accommodate the
growth anticipated under the 2017–21
strategic plan.
Under each of the strategic pillars are
specific programmes and financial
instruments through which priorities
identified in the strategy document are to
be tackled. Effective implementation of the
Bank’s 2017–21 strategic plan will involve
the cooperation of African governments,
multilateral institutions, African and
international banks, African traders and
African corporates as well as the strong
support of the Bank’s shareholders.
96  CHAPTER SEVEN  AFRICAN TRADE REPORT 2017
railway line in East Africa and is expected to
cut the time needed to transport a container
from Addis Ababa to Djibouti from three
days to 10 hours and slash the costs by a
third. The year 2015 also witnessed the
inauguration of the new Suez Canal in Egypt,
which expanded capacity from 49 ships per
day to 97 along one of the main arteries of
global trade. In 2016 the African Corridor
Management Alliance was launched, which is
expected to coordinate the sharing of best
practices and other strategies.
At the regional level, the East African
Community continued developing a regional
Authorized Economic Operator programme
with the assistance of the World Customs
Organization. The programme will provide
expedited customs clearance procedures
for authorized traders in the region. The
Southern African Customs Union continued
END
AFREXIMBANK  AFRICAN TRADE REPORT 2017  97
developing its regional Preferred Trade
Programme, also with the support of
the World Customs Organization. The
programme is geared towards promoting
traders’ compliance while improving trade
facilitation and regional integration.
Many African countries also introduced
(or are about to bring in) single window
systems. A single window is a facility that
allows parties in international trade and
transport to lodge standardized trade-
related information or documents once at a
single entry point to fulfil all import, export
and transit-related regulatory requirements.
In 2015–16 Benin, Republic of Congo, Côte
d’Ivoire, Kenya, Libya, Madagascar, Morocco,
Mozambique, Rwanda, Tanzania and Togo
all initiated or continued rolling out such
systems. Other countries have introduced
port community and regulatory systems.
8
Chapter Eight
Intra-African Trade
Intra-African trade recovered and gathered
momentum in 2016, growing an estimated
8.6 percent, to US$156.94 billion, after a
decline of 7.4 percent in 2015 (Table 8.1 and
Figure 8.1). Still, the share of intra-region
trade in the continent’s total merchandise
trade (15 percent) compares unfavourably
with that of Europe (67.3 percent), Asia
(58 percent), North America (48 percent)
and Latin America (20 percent) (Figure
8.2). Three main drivers were at work in
2015–16: commodity prices (particularly
energy), intra-African trade champions and
trade-enhancing regional economic blocs,
and currency shifts. This chapter focuses on
these themes in the countries that dominate
the intra-African trade landscape and
highlights key trends in other countries.

Figure 8.1 Trends in intra-African merchandise trade, 2005–16 (US$ billion)

200% -
Intra-African Exports 
 
180% -
160% - Intra-African Imports 
 
140% - Total Intra-African Merchandise Trade
 
120% -
100% -
80% -
60% -
40% -
20% -
0% -
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Economist Intelligence Unit, Country Report (various issues), International Monetary Fund Direction of Trade
Statistics database, United Nations Conference on Trade and Development UNCTADStat database and United Nations
Statistics Division database

Figure 8.2 Share of intra-region trade in total merchandise trade by region, 2014–16 (%)

80% -
70% - 2014   
  2015   
2016a
60% -
50% -
40% -
30% -
20% -
10% -
0% -
Africa Latin America and the North America Asia EU
Caribbean

a. Data are projections.   Source: International Trade Centre Trade Map database.

AFREXIMBANK  AFRICAN TRADE REPORT 2017  99

 Table 8.1 Intra-African Trade, (2014-16) (in US$ billion unless otherwise indicated)

Country Share of Total Country Share of Total

Total Intra-African Country Share of Total Trade Balance Value
Intra-African Exports Growth Rate, % Intra-African Exports, Intra-African Imports Growth Rate, % Intra-African Imports, Growth Rate, %
Trade Intra-African Trade, % (Exports - Imports)
% %
Africa 2014* 2015* 2016** 14/15 15/16 2014* 2015* 2016** 2014* 2015* 2016** 14/15 15/16 2014* 2015* 2016** 2014* 2015* 2016** 14/15 15/16 2014* 2015* 2016** 2014* 2015* 2016**
Algeria 2,72 1,61 2,01 -40,81 24,84 3,47 2,33 2,68 1,15 1,09 0,65 -5,01 -40,17 1,48 1,45 0,80 3,87 2,70 2,66 -30,16 -1,46 2,48 1,87 1,70 1,57 0,52 1,36
Angola 2,07 1,43 1,98 -30,92 38,46 2,64 2,07 2,64 1,48 1,22 1,08 -17,77 -11,11 1,90 1,61 1,32 3,55 2,65 3,06 -25,44 15,69 2,27 1,83 1,95 0,59 0,21 0,90
Benin 0,38 0,39 0,27 2,63 -30,77 0,49 0,57 0,36 0,66 0,71 0,88 7,89 22,93 0,85 0,95 1,07 1,04 1,10 1,15 5,97 3,96 0,67 0,76 0,73 -0,28 -0,32 -0,61
Botswana 1,25 1,35 1,44 8,00 6,45 1,60 1,96 1,92 5,91 6,00 7,28 1,52 21,33 7,61 7,95 8,88 7,16 7,35 8,72 2,65 18,60 4,59 5,09 5,55 -4,66 -4,65 -5,84
Burkina Faso 0,12 0,12 0,22 0,00 83,33 0,15 0,17 0,29 1,28 1,35 1,79 5,11 32,68 1,65 1,78 2,18 1,40 1,47 2,01 4,67 36,82 0,90 1,02 1,28 -1,16 -1,23 -1,57
Burundi 0,03 0,03 0,01 0,00 -66,67 0,04 0,04 0,01 0,25 0,26 0,40 4,32 53,37 0,32 0,35 0,49 0,28 0,29 0,41 3,85 40,98 0,18 0,20 0,26 -0,22 -0,23 -0,39
Cameroon 0,54 0,58 0,13 7,41 -78,35 0,69 0,84 0,17 1,69 1,75 2,06 3,68 17,78 2,17 2,32 2,52 2,23 2,33 2,19 4,58 -6,14 1,43 1,61 1,39 -1,15 -1,17 -1,94
Cape Verde 0,01 0,00 0,00 -100,00 0,00 0,01 0,00 0,00 0,02 0,02 0,02 -10,39 38,12 0,03 0,02 0,03 0,03 0,02 0,02 -40,41 38,12 0,02 0,01 0,02 -0,01 -0,02 -0,02
Central African Rep. 0,02 0,02 0,01 0,00 -50,00 0,03 0,03 0,01 0,07 0,07 0,09 7,47 21,51 0,09 0,10 0,11 0,09 0,09 0,10 5,79 6,30 0,06 0,07 0,06 -0,05 -0,05 -0,08
Chad 0,03 0,04 0,02 33,33 -50,00 0,04 0,06 0,03 0,21 0,22 0,41 4,51 89,61 0,27 0,29 0,50 0,24 0,26 0,43 8,16 67,81 0,15 0,18 0,27 -0,18 -0,18 -0,39
Comoros 0,00 0,00 0,00 n/a n/a 0,00 0,00 0,00 0,00 0,00 0,00 n/a n/a 0,00 0,00 0,00 0,00 0,00 0,00 n/a n/a 0,00 0,00 0,00 0,00 0,00 0,00
Congo, Dem. Rep. of 1,46 1,08 0,64 -26,03 -41,13 1,86 1,57 0,85 3,60 3,67 4,41 1,80 20,12 4,64 4,86 5,38 5,06 4,75 5,04 -6,22 6,20 3,25 3,29 3,21 -2,14 -2,59 -3,77
Congo, Rep. of 0,17 0,19 0,10 11,76 -45,44 0,22 0,28 0,14 0,54 0,48 0,71 -10,57 47,44 0,69 0,64 0,87 0,71 0,67 0,81 -5,21 21,16 0,45 0,46 0,52 -0,37 -0,29 -0,61
Côte d’Ivoire 4,24 3,42 4,65 -19,34 35,96 5,41 4,96 6,20 3,25 3,48 3,43 6,91 -1,21 4,19 4,60 4,19 7,49 6,90 8,08 -7,95 17,23 4,80 4,77 5,15 0,99 -0,06 1,22
Djibouti 0,46 0,48 0,63 4,35 30,74 0,59 0,70 0,84 0,16 0,16 0,12 0,24 -26,95 0,21 0,22 0,15 0,62 0,64 0,75 3,27 16,03 0,40 0,45 0,48 0,30 0,32 0,51
Egypt 2,90 2,65 3,31 -8,62 25,06 3,70 3,84 4,42 1,13 1,63 0,41 44,37 -74,55 1,45 2,15 0,51 4,03 4,28 3,73 6,21 -12,83 2,58 2,96 2,38 1,77 1,02 2,90
Equatorial Guinea 0,57 0,31 0,40 -45,61 29,43 0,73 0,45 0,54 0,31 0,27 0,43 -12,01 57,26 0,40 0,36 0,52 0,88 0,58 0,83 -33,76 42,47 0,56 0,40 0,53 0,26 0,04 -0,03
Eriteria n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Ethiopia 0,14 0,16 0,14 14,29 -12,50 0,18 0,23 0,19 0,45 0,59 0,67 31,56 12,50 0,58 0,78 0,81 0,59 0,75 0,81 27,46 7,18 0,38 0,52 0,51 -0,31 -0,43 -0,53
Gabon 0,35 0,24 0,21 -31,43 -13,67 0,45 0,35 0,28 0,58 0,54 0,75 -7,01 40,18 0,74 0,71 0,92 0,93 0,78 0,96 -16,25 23,51 0,59 0,54 0,61 -0,23 -0,30 -0,54
Gambia, The 0,01 0,01 0,01 0,00 0,00 0,01 0,01 0,01 0,15 0,11 0,20 -26,93 77,52 0,20 0,15 0,24 0,16 0,12 0,21 -25,29 71,20 0,11 0,08 0,13 -0,14 -0,10 -0,19
Ghana 1,33 0,68 0,46 -48,87 -32,35 1,70 0,99 0,61 3,65 3,86 5,27 5,86 36,43 4,70 5,12 6,43 4,98 4,54 5,73 -8,76 26,13 3,19 3,14 3,65 -2,32 -3,18 -4,81
Guinea 0,03 0,10 0,08 233,33 -20,00 0,04 0,15 0,11 0,37 0,31 0,43 -16,56 37,36 0,48 0,41 0,52 0,40 0,41 0,51 1,99 23,45 0,26 0,29 0,32 -0,34 -0,21 -0,35
Guinea-Bissau 0,08 0,08 0,07 0,00 -12,50 0,10 0,12 0,09 0,09 0,05 0,09 -44,46 73,64 0,12 0,07 0,11 0,17 0,13 0,16 -23,94 21,37 0,11 0,09 0,10 -0,01 0,03 -0,02
Kenya 2,27 2,62 2,52 15,42 -3,67 2,90 3,80 3,37 1,33 1,50 0,79 12,48 -47,12 1,72 1,99 0,97 3,60 4,12 3,32 14,33 -19,49 2,31 2,85 2,11 0,94 1,12 1,73
Lesotho 0,02 0,03 0,03 50,00 11,88 0,03 0,04 0,04 0,01 0,01 0,01 0,00 28,76 0,01 0,01 0,02 0,03 0,04 0,05 33,33 16,10 0,02 0,03 0,03 0,01 0,02 0,02
Liberia 0,02 0,02 0,01 0,00 -50,00 0,03 0,03 0,01 0,27 0,27 0,33 0,94 23,60 0,35 0,36 0,41 0,29 0,29 0,34 0,88 18,54 0,18 0,20 0,22 -0,25 -0,25 -0,32
Libya 0,41 0,16 0,02 -60,98 -87,50 0,52 0,23 0,03 1,04 1,07 1,00 3,11 -6,71 1,34 1,42 1,22 1,45 1,23 1,02 -14,99 -17,18 0,93 0,85 0,65 -0,63 -0,91 -0,98
Madagascar 0,20 0,20 0,07 0,00 -66,51 0,26 0,29 0,09 0,44 0,42 0,55 -2,85 29,11 0,56 0,56 0,67 0,64 0,62 0,61 -1,95 -1,59 0,41 0,43 0,39 -0,24 -0,22 -0,48

100  CHAPTER EIGHT  AFRICAN TRADE REPORT 2017

Malawi 0,28 0,24 0,07 -14,29 -70,83 0,36 0,35 0,09 0,83 0,82 1,05 -1,22 27,56 1,07 1,09 1,28 1,11 1,06 1,12 -4,50 5,37 0,71 0,74 0,71 -0,55 -0,58 -0,98
Mali 0,04 0,04 0,06 0,00 50,00 0,05 0,06 0,08 1,83 1,77 2,49 -3,29 40,43 2,36 2,35 3,04 1,87 1,81 2,55 -3,22 40,64 1,20 1,25 1,62 -1,79 -1,73 -2,43
Mauritania 0,40 0,42 0,42 5,00 0,20 0,51 0,61 0,56 0,62 0,58 0,60 -5,88 2,37 0,80 0,77 0,73 1,02 1,00 1,02 -1,61 1,46 0,65 0,69 0,65 -0,22 -0,16 -0,17
Mauritius 0,41 0,44 0,31 7,32 -28,90 0,52 0,64 0,42 0,54 0,53 0,54 -1,60 1,74 0,69 0,70 0,66 0,95 0,97 0,85 2,25 -12,17 0,61 0,67 0,54 -0,13 -0,09 -0,23
Morocco 1,86 1,78 1,66 -4,30 -6,84 2,37 2,58 2,21 1,83 1,53 1,67 -15,92 8,97 2,35 2,03 2,04 3,69 3,31 3,33 -10,06 0,48 2,36 2,29 2,12 0,03 0,25 -0,01
Mozambique 1,24 1,07 0,75 -13,71 -30,23 1,58 1,55 1,00 3,72 3,42 4,32 -8,04 26,41 4,79 4,53 5,28 4,96 4,49 5,07 -9,45 12,91 3,18 3,11 3,23 -2,48 -2,35 -3,58
Namibia 4,33 5,47 6,01 26,33 9,87 5,53 7,93 8,01 5,19 5,08 6,71 -2,12 31,99 6,68 6,73 8,18 9,52 10,55 12,72 10,82 20,52 6,10 7,30 8,10 -0,86 0,39 -0,70
Niger 0,23 0,24 0,12 4,35 -50,16 0,29 0,35 0,16 0,55 0,57 0,68 4,51 18,06 0,71 0,76 0,83 0,78 0,81 0,80 4,46 -2,04 0,50 0,56 0,51 -0,32 -0,33 -0,56
Nigeria 11,58 9,72 11,49 -16,06 18,21 14,78 14,10 15,32 2,83 2,56 1,91 -9,34 -25,47 3,64 3,39 2,33 14,41 12,28 13,40 -14,74 9,10 9,24 8,50 8,54 8,75 7,16 9,58
Rwanda 0,13 0,14 0,10 7,69 -28,57 0,17 0,20 0,13 0,57 0,59 0,67 3,36 14,92 0,73 0,78 0,82 0,70 0,73 0,77 4,17 6,54 0,45 0,50 0,49 -0,44 -0,45 -0,57
Sao Tome and Principe 0,00 0,00 0,00 n/a n/a 0,00 0,00 0,00 0,01 0,01 0,01 4,89 31,48 0,01 0,01 0,02 0,01 0,01 0,01 4,89 31,48 0,01 0,01 0,01 -0,01 -0,01 -0,01
Senegal 1,20 0,99 1,07 -17,50 7,78 1,53 1,44 1,42 0,97 0,88 0,71 -9,36 -19,27 1,24 1,16 0,86 2,17 1,87 1,77 -13,87 -4,91 1,39 1,29 1,13 0,23 0,11 0,36
Seychelles 0,06 0,09 0,08 50,00 -11,11 0,08 0,13 0,11 0,11 0,11 0,14 -0,02 25,27 0,14 0,14 0,17 0,17 0,20 0,22 17,74 8,81 0,11 0,14 0,14 -0,05 -0,02 -0,06
Sierra Leone 0,03 0,03 0,03 0,00 0,00 0,04 0,04 0,04 0,17 0,14 0,21 -18,29 47,90 0,22 0,18 0,25 0,20 0,17 0,24 -15,54 39,38 0,13 0,12 0,15 -0,14 -0,11 -0,18
Somalia 0,03 0,04 0,01 33,33 -75,00 0,04 0,06 0,01 0,67 0,70 0,93 4,23 32,70 0,87 0,93 1,13 0,70 0,74 0,94 5,47 26,89 0,45 0,51 0,60 -0,64 -0,66 -0,92
South Africa 27,52 23,55 26,75 -14,43 13,59 35,13 34,15 35,67 13,72 11,64 9,86 -15,13 -15,33 17,67 15,42 12,03 41,24 35,19 36,61 -14,66 4,02 26,44 24,36 23,33 13,80 11,91 16,89
South Sudan n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Sudan 0,22 0,18 0,18 -18,18 1,12 0,28 0,26 0,24 0,23 0,26 0,21 13,05 -18,27 0,29 0,34 0,26 0,45 0,44 0,39 -2,31 -10,28 0,29 0,30 0,25 -0,01 -0,08 -0,03
Swaziland 0,14 0,10 0,11 -28,57 10,00 0,18 0,15 0,15 0,27 0,28 0,25 3,70 -9,93 0,35 0,37 0,31 0,41 0,38 0,36 -7,32 -4,68 0,26 0,26 0,23 -0,13 -0,18 -0,14
Tanzania 0,85 0,83 0,68 -2,35 -18,07 1,09 1,20 0,91 1,35 1,48 1,63 9,71 9,52 1,74 1,96 1,98 2,20 2,31 2,31 5,05 -0,37 1,41 1,60 1,47 -0,50 -0,65 -0,95
Togo 0,82 0,85 0,96 3,66 12,94 1,05 1,23 1,28 0,43 0,47 0,46 10,23 -1,82 0,55 0,62 0,56 1,25 1,32 1,42 5,90 7,70 0,80 0,91 0,90 0,39 0,38 0,50
Tunisia 1,22 1,10 1,18 -9,84 7,10 1,56 1,60 1,57 0,00 0,00 0,01 n/a n/a 0,00 0,00 0,01 1,22 1,10 1,19 -9,84 8,01 0,78 0,76 0,76 1,22 1,10 1,17
Uganda 0,77 0,77 0,56 0,00 -26,85 0,98 1,12 0,75 1,99 2,08 2,35 4,73 12,89 2,56 2,76 2,87 2,76 2,85 2,91 3,41 2,16 1,77 1,97 1,86 -1,22 -1,31 -1,79
Zambia 2,14 1,70 1,98 -20,56 16,47 2,73 2,47 2,64 5,85 5,66 6,21 -3,16 9,65 7,53 7,50 7,58 7,99 7,36 8,19 -7,82 11,23 5,12 5,10 5,22 -3,71 -3,96 -4,23
Zimbabwe 1,00 1,17 0,98 17,00 -16,24 1,28 1,70 1,31 3,30 3,21 4,06 -2,56 26,53 4,24 4,25 4,96 4,30 4,38 5,04 1,99 15,11 2,75 3,03 3,21 -2,30 -2,04 -3,08
Total 78,33 68,96 74,99 -11,96 8,75 100,00 100,00 100,00 77,65 75,52 81,95 -2,75 8,51 100,00 100,00 100,00 155,98 144,48 156,94 -7,38 8,63 100,00 100,00 100,00 0,68 -6,56 -6,95

* Revised   ** Estimates for 2016 based on latest avaibale data  

n/a not available
Sources: 1) IMF (2016) Direction of Trade Statistics (Database). 2) IMF (2001) Direction of Trade Statistics - Yearbook. 3) EIU, Country Risk Service (various issues). 4) EIU, Country Report (various issues). 5) UNCTADSTAT, 2016. 6) Afreximbank Staff estimates.
Commodity price shifts, particularly in 8.1 Intra-African Trade Champions
energy markets, heavily affected intra-
African trade in 2015–16. Crude oil prices fell Of the top 10 contributors to intra-African
sharply in 2015, dipping over 47 percent as trade, 3 accounted for 40 percent of the
global supply continued to outpace global total US dollar value: South Africa (23.3
demand, bottoming out only in the first half percent), Nigeria (8.5 percent) and Namibia
of 2016 and staging a modest recovery in (8.1 percent) in 2016 (Figure 8.3). Seven—
the rest of the year. Because oil is the main Botswana, Zambia, Côte d’Ivoire, Ghana,
product in intra-African trade, the fall in Mozambique, Democratic Republic of Congo
oil prices reduced the total US dollar value and Zimbabwe—account for around 30
of trade within the continent in 2015 and, percent of the total. The remaining 44
conversely, boosted the US dollar value of African countries account for around 30
trade as oil prices began to rise (though percent.
modestly) in 2016. Oil as a share of intra-
African trade fell an estimated 3 percentage South Africa dominated intra-African trade
points from its long-term average of 28.6 in 2016, accounting for just over 23 percent
percent, to 25.6 percent in 2015. of the total, down from 26.4 percent in 2014
and 24.4 percent in 2015. The moderation
Trade within regional economic blocs was was steeper in 2015, with exports falling
lively, with regional economic communities more than 14 percent and imports falling
providing enabling environments, as more than 15 percent. While exports to the
reflected by market access preferences and rest of the region have recovered, South
continued efforts at developing trade and Africa’s imports from other African countries
transport corridors. The Southern African remained sluggish, trending downward from
Development Community was the most US$13.7 billion in 2014 to US$11.64 billion in
vibrant trading bloc in Africa (see section 2015 to US$9.9 billion in 2016. South Africa
8.3), with strong demand from member therefore widened its trade surplus with the
countries for a host of South African rest of Africa from US$13.8 billion in 2014
exports, including petroleum products and to US$11.9 billion in 2015 to around US$17
vehicles. billion in 2016.

Figure 8.3 Top 10 contributors to intra-African trade, 2014–16 (%)

30% -
2014   
  2015   
2016

25% -

20% -

15% -

10% -

5% -

0% -
Af r i
ca er i a ibia s wa
na bia oire Gha
na que em . b ab
we
th Nig Nam B ot Z am e d ’I v a mbi g o, D g o Z im
S ou Cô t M oz n
Co f Co n
.o
Re p

Source: International Trade Centre Trade Map database

AFREXIMBANK  AFRICAN TRADE REPORT 2017  101

The decrease in South Africa’s import values
relates to the collapse in the price of oil
over 2015–16, as oil is the largest product
imported by South Africa (for intra- and
extra-Africa trade). According to data from
the International Trade Centre Trade Map
database, South Africa typically imports 40–
50 percent of its fuel and energy needs from
the rest of Africa, mainly Nigeria and Angola.
Oil and gas imports account for around 70
percent of South Africa’s imports from the
rest of the region. Intriguingly, there has
been a larger share of oil and gas imports
from the rest of Africa as oil prices fell in
2015, suggesting that the competitiveness
of African oil producers to importers in the
region has been enhanced.
South Africa’s exports to the rest of Africa
recovered in 2016 after sliding in 2015
and have generally been resilient to the
headwinds that have slowed its exports to
rest of the world over the last five years.
Box 8.1: Light manufacturing as a driver of intra-Africa trade:
Emerging best practice
Limited manufacturing industries
have confined African countries to the
production of the same goods, resulting
in product concentration in a world where
trade is driven by product differentiation
and exploitation of comparative
advantages. This constraint, possibly the
result of a historical legacy, has hindered
the continent’s ability to integrate into
the global economy where trade is
increasingly dominated by manufactured
goods, and has undermined the expansion
of intra-Africa trade, which languishes at
about 15 percent of total African trade.
Inadequate industrial capability means
that Africa cannot meet its growing
need for manufactured goods, which
account for over 65 percent of total
imports, thus widening the region’s
102  CHAPTER EIGHT  AFRICAN TRADE REPORT 2017
Regional economic communities have been
a particularly important catalyst for South
Africa’s trade with its peers: the strongest
demand for the country’s exports comes
from other Southern African Development
Community members,1 and demand from
them is buoyant. Exports to the rest of
Africa are broad-based and include vehicles,
consumer goods, construction materials,
agricultural inputs and food.
Nigeria is the second largest intra-
African trader, but trade slumped in 2015
before rebounding in 2016. The decline is
attributable largely to a drop in exports,
which fell over 16 percent in 2015, to
1 The other Southern African Development
Community members are Angola, Botswana,
Democratic Republic of Congo, Lesotho,
Madagascar, Malawi, Mauritius, Mozambique,
Namibia, Seychelles, Swaziland, Tanzania,
Zambia and Zimbabwe.
balance of payments deficits and further
undermining intra-Africa trade. A thriving
light manufacturing sector has several
benefits. In addition to driving economic
transition and structural transformation,
it can boost export investments,
diversification and value addition and
facilitate technology transfer to raise
productivity.
Much of the success that developing Asian
economies achieved over the last few
decades is a result of well-implemented
export development strategies supported
by a rise in light manufacturing products.
China and Vietnam, at the initial stage
of their industrialization and economic
development, established manufacturing
zones at the proximity of major ports
to ensure competitiveness and success
of their nascent industries. They also
undertook reforms to attract foreign
direct investment in key industries to
ensure competitiveness and economies of
scale (Dinh et al. 2012).
A growing number of African countries
whose comparative advantage hinges on
low-cost labor and abundant resources
are promoting light manufacturing
industries in their development
strategies, with a view to accelerating
industrialization to mitigate the risks
associated with deteriorating commodity
terms of trade. These countries are
actively supporting policies focused on
growing key industries and associated
infrastructure in order to shift the
continent’s economy from resource-
based to higher value added production.
These aspirations are captured in the
African Union’s Vision 2063 and the
associated African Industrialization
Development Action Plan, which prioritize
industrialization through regional
manufacturing hubs and scaling up of
higher value added products (AU Agenda
2063, 2014). The emphasis on light
manufacturing will also address product
concentration, which has constrained
Figure B8.1. Share of manufacturing in intra-regional trade, 2007–16 (%)
80 -
60 -
40 -
20 -
0-
2007 2008 2009 2010
Source: World Bank World Development Indicators database.
AFREXIMBANK  AFRICAN TRADE REPORT 2017  103
the expansion of intra-Africa trade and
undermined economic integration.
While African countries are taking steps to
promote light manufacturing industries,
the region as a whole still compares
unfavorably with other regions, including
other developing countries. For instance,
South Africa, the most industrialized
African economy, compares unfavorably
with China and the Republic of Korea
in the share of higher value products
in intra-regional trade (Figure B8.1).
Limited industrial capability and product
concentration has kept the continent’s
share of global trade at about 3 percent.
At the same time the share of intra-Africa
trade in total African trade remains at
15 percent, compared with 67 percent in
Europe and 58 percent in Asia.
One key constraint facing African
countries is the limited access to
competitive and sustainable financing
to establish new factories and draw
on innovation to expand the capacity
of existing ones. This, combined with
such factors as infrastructure deficits,
particularly electricity and transport
networks, are constraining both
output and expansion of productivity.
2011 2012 2013 2014 2015 2016
China   
  South Korea   
South Africa
 For instance, poor transport logistics
undermines the competitiveness of the
wood and apparel industries in Ethiopia
and the consequent high transport
cost erodes the industries’ labor cost
advantage (Dinh et al. 2012). The report
also highlights that labor productivity
per worker in the light manufacturing
sector is higher in Asia than in Africa.
Poor skills, both managerial and technical,
and high input costs are also significant
impediments to the growth of light
manufacturing industries in the continent.
The importance of light manufacturing
industries for promoting growth and
trade diversification in Africa has also
informed the development of the
African Export-Import Bank’s fifth
strategic plan. The promotion of Pillar
Two, Industrialization and Export
Development, is essential to the growth
US$9.72 billion, before improving to US$11.5
billion in 2016. Still, the recovery in trade in
2016 was too shallow to maintain Nigeria’s
historical share of intra-African trade, which
stood at 8.54 percent in 2016, down sharply
from 9.24 percent in 2014. Imports from the
rest of the continent fell 9.3 percent in 2015
and 25.5 percent 2016.
Because Nigeria’s export profile is skewed
heavily towards crude oil, the fall in
commodity prices hit the value of the
country’s intra-African exports but not
the volume. African importers of Nigerian
crude oil—mainly South Africa, Côte d’Ivoire,
Cameroon and Senegal—benefited from the
weakness in crude oil prices and boosted
their demand for Nigerian crude in 2015–16.
For example, South Africa imported around
53 percent of its crude oil and gas needs
from Nigeria in 2015, up from 31 percent
in 2014. Oil shipments from Saudi Arabia
104  CHAPTER EIGHT  AFRICAN TRADE REPORT 2017
of Pillar One, Intra-Africa Trade. The Bank
has already embarked on initiatives to
support industrialization in Africa with
a view to creating greater capacity for
the production of value-added goods
and to boosting intra-Africa trade. Key
instruments that the Bank will deploy
to achieve these objectives include the
financing of industrial parks, production
input financing facility, project financing
line of credit, and construction and
export manufacturing facility. The Bank
is also working with various African
governments establish and rehabilitate
industrial parks or export processing
zones to accelerate industrialization
in support of intra-Africa trade and
structural transformation. A shift from
product concentration to value addition
and differentiation under the strategy
will ultimately diversify growth sources
and boost intra-Africa trade.
to South Africa fell over the same period,
from 37 percent of total imports to under
18 percent, suggesting that Nigeria was able
to grab market share from the previous top
energy supplier to South Africa.
Moves on domestic currency markets
impeded growth of Nigerian imports
from the rest of the continent as tight
foreign exchange supplies after the end
of the commodity super-cycle capped the
country’s imports. The sharp devaluation
of the naira and subsequent measures
by the Nigerian Central Bank to control
speculation curtailed supply of foreign
currency, which in turn constrained imports.
The devaluation of the naira raised the
competitiveness of locally manufactured
goods in Nigeria. The drop in Nigeria’s
demand for goods from the rest of Africa
marginally affected South Africa, Nigeria’s
largest import partner for chemicals, food
and vegetables, construction materials and
vehicles.
Firmer exports and weaker imports helped
Nigeria boost its trade surplus with the
rest of Africa from US$7.2 billion in 2015 to
US$9.6 billion in 2016. Nigeria is one of only
two countries in the region to have an intra-
African trade surplus of over US$3 billion
(the other is South Africa). That said, these
figures do not capture the thriving cross-
border trade in Gulf of Guinea countries,
involving Nigeria, Cameroon, Benin and
Togo, but particularly between Nigeria and
Cameroon, given their extensive and porous
shared border. Food imports to Nigeria from
Cameroon dominate this trade, while light
equipment and cosmetics form part of the
profile of goods from Nigeria to Cameroon.
Namibia is the last of the trio of countries
that account for 40 percent of intra-African
trade, with an estimated at US$12.7 billion
in 2016, up from US$9.5 billion in 2014. The
country has greatly boosted its share of
intra-African trade, which rose 10.8 percent
in 2015 and 20.5 percent in 2016. Namibia
accounted for over 8 percent of intra-African
trade in 2016, up from 6.1 percent in 2014
and 5.0 percent in 2010.
Two key drivers are the country’s strong
trade links with South Africa and the growth
of its precious minerals industry. South
Africa has consistently been the source
of over 70 percent of Namibia’s imports,
even though Asian exporters, mainly China
and the Republic of Korea, are starting
to make some gains. The fluidity in South
Africa–Namibia trade is enhanced by the
countries’ membership in the Southern
African Development Community, the South
African Customs Union and the Common
Monetary Area, whose currency peg keeps
the Namibian dollar and the South African
rand at parity. That peg helped mitigate the
impact of the Namibian dollar’s depreciation
in 2015 and allowed Namibian imports of
vehicles, heavy and light manufacturing, and
fuels to continue unabated in 2015–16.
AFREXIMBANK  AFRICAN TRADE REPORT 2017  105
Namibia also has a thriving export trade
with Southern African Development
Community countries, primarily Botswana,
South Africa and Angola, which together
account for around 50 percent of Namibia’s
global export markets. About a quarter of
Namibia’s merchandise exports comes from
diamonds. Gold, zinc concentrate, uranium,
manufactured goods, and food and live
animals are also important. Botswana is
the trade destination for around a quarter
of Namibia’s diamond exports, by virtue
of its world class diamond industry. In
2015–16 Namibia’s diamond mining sector
faced headwinds owing to a modest decline
in prices related to the slowdown in the
global economy, particularly in China, which
restrained discretionary spending. Further,
Namibia saw a contraction in diamond
supply attributable partly to the lower
quality of diamonds mined by its diamond
corporation Namdeb, which slowed the
growth in diamond exports. However, the
impact of smaller diamond exports on total
intra-African exports was offset partly by
a rebound in exportable uranium surpluses,
firmer gold prices in 2016 and exports
of small livestock. Otherwise, Namibia’s
position as an important re-export hub in
Southern Africa continues to support its
burgeoning intra-African trade.
8.2 Intra-African trade
developments for selected
countries
Among other countries that have smaller but
still-sizable shares of intra-African trade,
Botswana, Zambia and Côte d’Ivoire saw a
marked recovery in intra-African exports
in 2016, after plummeting in 2015. Ghana,
Mozambique, Democratic Republic of Congo
and Zimbabwe all saw double-digit growth in
intra-African imports in 2016—Ghana aside,
building on the modest growth of their intra-
African imports in 2015.
Commodity price shifts were a strong
driver for intra-African trade, even among
exporters such as Botswana, where the
consistent growth of its intra-African
exports reflects increased diamond sales,
largely to South Africa. Botswana now
accounts for 5.6 percent of intra-African
trade, up from 4.6 percent in 2014.
In Zambia the decline in intra-African
exports in 2015 was due partly to the
slowdown in the global economy, which
undermined prices for base metals, including
copper, a key Zambian export, as well as
demand from trade partners in Africa
(mainly South Africa and Mozambique). The
US dollar value of Zambia’s sugar exports
to Democratic Republic of Congo and
South Africa was stunted by softer prices,
reflecting large global supplies, but the
declines were compensated for partly by
an increase in Zambia’s grain exports to the
rest of Africa in 2015, with strong sales to
Zimbabwe and, to a lesser extent, Malawi.
Still, moderately firmer copper prices and a
rally in sugar prices in 2016 helped boost the
value of Zambia’s intra-African exports.
The V-shaped trend in Côte d’Ivoire’s
exports to the rest of Africa was also driven
by commodity prices, as the US dollar value
of its refined petroleum exports to Nigeria,
Mali, Burkina Faso, Togo and Cameroon
dipped in line with the slump in energy prices
in 2015 but improved in 2016, as energy
prices began to recover. Oil dominates Côte
d’Ivoire’s exports to the rest of Africa,
accounting for more than a third of such
exports. The decline in 2015 and subsequent
recovery in 2016 of edible oil exports from
Côte d’Ivoire to the rest of Africa also
reflect the trend in global edible oil prices
on international markets. Côte d’Ivoire
expanded its share of intra-African trade
from 4.8 percent in 2014 to 5.2 percent in
2016.
Trade with Côte d’Ivoire helped Ghana
expand its share of intra-African trade
as it ramped up imports. South Africa,
Côte d’Ivoire and Guinea are three of the
biggest sources of Ghana’s African imports.
106  CHAPTER EIGHT  AFRICAN TRADE REPORT 2017
Products are broad-based and include
vehicles, construction equipment, foodstuffs
and primary commodities (including cocoa,
and oil and gold). Firmer commodity prices
in 2016 helped boost the US dollar value
of Ghana’s intra-African imports in 2016
while lifting the value of exports from other
African countries.
Mozambique’s burgeoning power and
infrastructure needs are helping drive its
intra-African trade, with South Africa, from
which Mozambique typically sources over 75
percent of its imports, the main beneficiary.
Mozambique’s imports from Africa grew over
25 percent in 2016 (after declining 8 percent
in 2015), which marginally increased the
country’s share of intra-African trade.
Democratic Republic of Congo deepened
its demand for imports from the rest of
Africa, which after a tame performance in
2015 grew by 20 percent in 2016. South
Africa and Zambia are the main sources of its
African imports, accounting for more than
30 percent of the country’s total imports
by value. Democratic Republic of Congo’s
imports from South Africa range wide and
include manufactured and intermediate
goods, vehicles and consumer perishables.
Democratic Republic of Congo’s main import
categories from Zambia are agricultural
commodities, energy products and
chemicals. However, despite the significant
increase in Democratic Republic of Congo’s
import demand from Africa, the country’s
share of intra-African trade stagnated in
2014–16 because of a large decline in its
exports to the rest of Africa.
Zimbabwe deepened its trade links with
the rest of Africa over 2015–16, expanding
imports 26.5 percent in 2016 after a
moderate decline in 2015. The decline largely
reflected weaker prices for energy, which
Zimbabwe sources from South Africa and
Mozambique, and sluggish prices for grain,
much of which it sources from Zambia. The
rebound in the US dollar value of Zimbabwe’s
intra-African imports partly reflects higher
commodity prices (excluding grain, which
remain subdued) and increasing demand for
fast-moving consumer goods from South
Africa.
The recovery in energy prices in 2016 helped
boost the intra-African trade of smaller oil
exporters, particularly in the Gulf of Guinea,
that had seen their exports to the rest
of Africa fall in 2015. The US dollar value
of exports from Angola grew almost 40
percent in 2016 after a decline of almost
31 percent in 2015. Equatorial Guinea also
expanded its exports almost 30 percent,
following a 45 percent decline in 2015.
AFREXIMBANK  AFRICAN TRADE REPORT 2017  107
Egypt’s share of intra-African trade has
fallen. Its intra-African imports tumbled
around 75 percent in 2016, more than
erasing the over 44 percent gain in 2015.
The decline in imports partly reflects longer
term economic and structural challenges
and more immediately the government’s
measures to stabilize the economy by
devaluing the pound. With a much weaker
currency the country boosted exports to
the rest of Africa 25 percent in 2016, after a
fall of over 8 percent 2015. Egypt’s export
markets span the entire continent, although
there is a bias towards North Africa. Egypt’s
intra-African exports include petroleum
Figure 8.4 Composition of intra-African trade for selected products, 2001–15 (%)

12% - Precious minerals 

 
Machinery and intermediate goods 
 
10% - Vehicles other than railway stocks
 
Electrical machinery and equipment 
 
8% - Iron and steel
 

6% -

4% -

2% -

0% -
13

13

13
12

12

15

15

12

15
10

10

10
11

11

14

14

11

14
20

20

20

20

20

20
20

20

20
20

20

20

20

20

20
20

20

20
Source: International Trade Centre Trade Map database.

products and agricultural commodities,
fast-moving consumer goods, and building
and construction materials. The value of
Egypt’s intra-African exports for 2016 is
estimated at US$3.3 billion, which makes it
the fifth largest intra-African exporter, after
South Africa, Nigeria, Namibia and Côte
d’Ivoire.
São Tomé and Príncipe, Cape Verde,
Lesotho, Central African Republic and
Guinea-Bissau are at the low end of the
intra-African trade spectrum. Their share
of intra-African trade is fettered by scarcity
of natural resources, small markets and,
for Central African Republic, socio-political
instability. That said, there is anecdotal
evidence of a thriving, albeit, informal trade
in fast-moving consumer goods between
Central African Republic and Cameroon,
which is also supported by Cameroon’s
seaport facilities.
The composition of intra-African trade
is heavily skewed towards commodities,
particularly oil and precious minerals such
as diamonds and gold, which have propelled
commodity exporters and importers to a
larger share of intra-African trade. More
important for structural transformation (see
chapter 2), the gradual rise of machinery
and intermediate goods in recent years is
encouraging because it suggests a move
away from trading primary commodities
to value-added products (Figure
8.4). Nonetheless, the growth rate of
manufactured goods is marginal, reflecting
still-low industrialization.
8.3 Trade within regional economic
communities
Regional economic communities remain
vibrant areas for intra-African trade and
are gaining in prominence, especially given
rising global protectionism. Although the US
dollar value of intra-regional trade declined
in 2015–16, this was more an indication of
weaker US$ dollar–denominated commodity
prices. For example, because oil and energy
products account for over 40 percent of

108  CHAPTER EIGHT  AFRICAN TRADE REPORT 2017

Figure 8.5 Total trade within African regional economic communities, 2014–16 (US$ billion)
90 - 2014   
  2015   
2016
80 -
70 -
60 -
50 -
40 -
30 -
20 -
10 -
0-
CEMAC EAC
Source: International Trade Centre Trade Map database.
total trade by value in the Arab Maghreb
Union and the Economic Community of West
African States, the sharp decline in oil prices
(47.2 in 2015 and 11.6 percent in 2016)
similarly stifled the value of trade in these
regional economic communities.
Among the six regional economic
communities assessed, trade within the
Southern African Development Community
is the largest, followed by that within
Economic Community of West African States
(Figure 8.5). Trade within some regional
economic communities is facilitated by
currency arrangements, as in the Southern
African Development Community and its
four-country Common Monetary Area,
which has mitigated the impact of currency
volatility and helped keep trade buoyant
in the subregion. Similarly, the CFA franc
arrangement among eight Economic
Community of West African States countries
benefits cross-border trade in that subregion.
Trade within the Economic Community of
Central African States remains muted, at
UMA COMESA ECOWAS SADC
only US$1.1 billion in 2016. This is explained
partly by the fact that it is made up of six
countries with small economies, compared
with 19 in the Economic Community of
West African States and 15 in the Southern
African Development Community, with weak
complementarity in their merchandise trade
profile.
Because of the East African Community’s
diverse merchandise trade profile, with
electrical goods, textiles, construction
materials and agricultural products
accounting for over 50 percent of trade
and energy products making up less than
8 percent, the subregion’s intra-regional
trade remained largely flat in 2015, at
US$5.6 billion, showing greater resilience
than trade within other regional economic
communities, which declined. The inclusion
of South Sudan as a new member in 2016
strengthened the bloc and promoted
regional integration. It also provided
seaport facilities to landlocked South Sudan
and access to a market with a combined
GDP of around US$155 billion.
AFREXIMBANK  AFRICAN TRADE REPORT 2017  109
9
Chapter Nine
Prospects
Global growth is projected to increase to
3.5 percent in 2017, up from 3.1 percent in
2016, supported by rising investment and
manufacturing output coupled with a pick-
up in global demand.
The gradual but steady improvement in
activity among developed economies
is projected to continue, driven by
accommodative policies, especially
expansionary fiscal policy in the United
States and continued implementation of
quantitative easing by the European Central
Bank, the Bank of England and the Bank of
Japan; by cyclical recovery; by rising global
manufacturing; and by improving market
confidence.
The US economy is projected to strengthen
on the back of growing public spending,
especially in infrastructure, increasing
manufacturing and rising consumer
spending in the face of strong job growth. In
the Eurozone continuation of current trends
is expected to keep the pace of growth at
about 1.7 percent in 2017. Nonetheless, the
Brexit vote and consequent uncertainty
associated with the future relationship
between the United Kingdom and the
rest the European Union, along with the
possibility of increased protectionism,
constitute major downside risks for
developed economies, with implications for
global trade and growth.
Among developing economies growth is
projected to strengthen slightly, driven
AFREXIMBANK  AFRICAN TRADE REPORT 2017  111
largely by strong activity in India and Brazil’s
recovery from recession. Major downside
risks include sustained growth deceleration
in China as the country rebalances, with a
consequent dampening effect on commodity
prices and fiscal revenues in commodity-
dependent countries; tighter external
financing conditions; and pronounced
reversal of capital flows to the United
States on the back of the expected gradual
increase in policy interest rates, with a likely
strengthening of the dollar.
Other risks to growth include structural
bottlenecks, domestic strife, political friction
and geopolitical tensions, especially in parts
of the Middle East, Eastern Europe and
Africa. Unanticipated inflationary pressures
could compel central banks to implement
a contractionary monetary policy, with
adverse implications for global growth, trade
and investment.
Growth in the volume of global merchandise
trade is projected to strengthen, accelerating
to 2.4 percent in 2017, up from 1.3 percent
in 2016. The rebound reflects expected
improvement in the global economy led by
synchronized expansion (though modest)
in most developed economies, notably the
United States, Canada, France and the United
Kingdom, and a slight pick-up in developing
economies driven by strong performance
in India and recovery in Russia and Brazil.
All of this could boost global trade growth.
Potential downside risks largely mirror those
for output.
African economies are projected to
strengthen, quickening to about 3.4 percent
growth in 2017, up from 2.8 percent in 2016,
largely reflecting the gradual recovery in
developed economies and resultant knock-on
effects on global demand. These elements
should help sustain the upward momentum
of most commodity prices and lift Africa’s
merchandise trade growth. Projected
recovery of the largest economies on the
continent—notably the emergence of Nigeria
from recession (as oil prices pick up and
public investment strengthens) and modest
recovery in South Africa and Angola—are
also expected to pull up Africa’s GDP growth.
Private consumption and investment,
underpinned by increasing consumer
confidence, continued improvement in the
business environment and declining costs
of doing business across the continent, and
increasing government spending, especially
on infrastructure, are other factors that
should stimulate African growth in 2017.
END
112  CHAPTER NINE  AFRICAN TRADE REPORT 2017
The key downside risks are essentially those
touched on just above.
Intra-African merchandise trade is projected
to improve as African countries continue
to undertake measures at the national
and regional levels to insulate themselves
from recurrent global shocks. These efforts
include the development of infrastructure-
supporting cross-border trade; initiatives
to diversify the export base; establishment
or reinforcement of regional blocs; and
economic cooperation with a view to
expanding cross-border and regional trade.
Longer term efforts across the continent
to deepen regional integration, especially
the Tripartite Free Trade Area Agreement,
the Economic Community of West African
States Common External Tariff and the
Continental Free Trade Area, are expected
to build a solid foundation for boosting
intra-African trade.
References

ACBF (African Capacity Building Foundation). 2015. “Africa Capacity Report: Capacity
Imperatives for Domestic Resource Mobilisation”. Harare: ACBF.

AFDB (African Development Bank). 2014. “Trade Finance in Africa”. Tunis. https://www.afdb.org/
fileadmin/uploads/afdb/Documents/Publications/Trade_Finance_Report_AfDB_EN_-_12_2014.
pdf.

African Union. 2014. Agenda 2063: The Africa We Want. African Union, Addis Ababa. https://
archive.au.int/assets/images/agenda2063.pdf

Ajayi, S. 1995. “Capital Flight and External Debt in Nigeria”. Research Paper No. 35, African
Economic Research Consortium, Nairobi, Kenya.

Anuradhu, R. 2017. “Rubber Market Seen Boosted by Higher Commodity Prices”. Bloomberg.
January 2017.

Artadi, E.V., and X. Sala-i-Martin. 2003. “The Economic Tragedy of the 20th Century: Growth
in Africa”. National Bureau of Economic Research (NBER) Working Paper No. 9865, NBER,
Cambridge, MA.

Australian Bureau of Meteorology. 2015. “El Niño strengthens but a warm Indian Ocean” http://
www.bom.gov.au/climate/enso/archive/ensowrap_20150901.pdf.

Binagwaho, A., and J.D. Sachs. 2005. Investing in Development: A Practical Plan to Achieve the
Millennium Development Goals. London: Earthscan.

Chang, H.-J. 2002. Kicking Away the Ladder: Development Strategy in Historical Perspective.
London: Anthem Press.

Chong-Hyun, N., and K. Chang-Jin. 2000. “Capital Accumulation and Trade Policy: The Case of
Korea”. International Economic Journal 14 (1): 111–31.

Dinh H. T., V. Palmade, V. Chandra, and F Cossar. 2012. Light Manufacturing in Africa: Targeted
Policies to Enhance Private Investment and Create Jobs. World Bank, Washington, DC.

Dohner, R.S. 1981.“Energy prices, economic activity, and inflation: a survey of issues and
results”. in K.A. Mork (ed.), Energy Prices, Economic Activity, and Inflation, Cambridge (Mass):
Ballinger.

AFREXIMBANK  AFRICAN TRADE REPORT 2017  113

Dowling, J.M., and U. Hiemenz. 1983. “Aid, Savings, and Growth in the Asian Region”. The
Developing Economies 21 (1): 3–13.

Elhiraika, Adam and Ndikumana, Léonce. 2007. “Reserves Accumulation in African Countries:
Sources, Motivations, and Effects”. Economics Department Working Paper Series. 24. http://
scholarworks.umass.edu/econ_workingpaper/24.

European Commission. 2014. Trade and Investment Barriers Report 2014. Report from the
Commission to the European Council. Brussels. http://trade.ec.europa.eu/doclib/docs/2014/
march/tradoc_152272.pdf.

Fofack, H. 2014. “The Idea of Economic Development: Views from Africa”. World Institute
for Development Economics Research (WIDER) Working Paper No. 2014/093, United Nations
University-WIDER, Helsinki, Finland.

Fofack, H., and L. Ndikumana. 2009. “Potential Gains from Capital Flight Repatriation for Sub-
Saharan African countries”. Policy Research Working Paper No. 5024, World Bank, Washington,
DC.

Foster, Vivien and Cecilia Briceno-Garmendia. 2009. Africa’s Infrastructure: A Time for
Transformation. Africa Development Forum Series. Washington, DC: World Bank. http://
documents.worldbank.org/curated/ en/2009/01/11487313/africas-infrastructure-time-
transformation.

Global Trade Alert. Online Monitoring Database. http://www.globaltradealert.org/.

Hansen, M.W., L. Buur, O. Therkildsen and M. Kjær. 2015. “The Political Economy of Local Content
in African Extractives: Lessons from Three African Countries”. Paper presented at: Årsmøde i
Dansk Selskab for Statskundskab, 23–24 October 2014, Vejle, Denmark. http://openarchive.cbs.
dk/bitstream/handle/10398/9014/Wendelboe%20Hansen.pdf?sequence=1.

Hermes, N., and R. Lensink. 2014. “Financial Liberalization and Capital Flight: Evidence from the
African Continent”. In Capital Flight from Africa: Causes, Effects, and Policy Issues, edited by S.
Ibi Ajayi and Léonce Ndikumana, 164–99. Oxford, UK: Oxford University Press.

Hufbauer, G.C., J.J. Schott, C. Cimino, M. Viero and E. Wada. 2013. Local Content Requirements:
A Global Problem. Policy Analyses in International Economics No. 102, Washington, DC: Peterson
Institute of International Economics.

International Chamber of Commerce. 2013. “Localization Barriers to Trade”. ICC Policy

Statement, Paris. https://cdn.iccwbo.org/content/uploads/sites/3/2014/06/LOCALIZATION-
BARRIERS-TO-TRADE.pdf.

International Cocoa Organisation. 2017. Quarterly Bulletin of Cocoa Statistics, Vol. XLIII, No. 1.
London.

114  AFREXIMBANK  AFRICAN TRADE REPORT 2017

IMF (International Monetary Fund). 2017. “Nigeria: 2017 Article IV Consultation- Press Release”;
Staff Report; and Statement by the Executive Director for Nigeria, Country report no.17/80.
Washington, DC.

Isis, A. 2016. “ISO sees 2nd Global Sugar Shortage Eroding Surplus Stockpiles”. Bloomberg. May
2016

Lin, J.Y. 2012. “New Structural Economics: The Third Wave of Development Thinking”. The 12th
Heinz W. Arndt Memorial Lecture, The Australian National University, Canberra, Australia, June
6.

———. 2013. “Demystifying the Chinese Economy”. Australian Economic Review 46 (3): 259–
68.

Lin, J.Y., and C. Monga. 2010. “The Growth Report and New Structural Economics”. Policy
Research Working Paper No. 5336, World Bank, Washington, DC.

Lin, J.Y., X. Sun and Y. Jiang. 2013. “Endowment, Industrial Structure and Appropriate Financial
Structure: A New Structural Economics Perspective”. Journal of Economic Policy Reform 16 (2):
1–14.

Ndikumana, L. 2015. “Savings, Capital Flight, and African Development”. In The Oxford
Handbook of Africa and Economics: Volume 2: Policies and Practices, edited by C. Monga and J.Y.
Lin, 204–21. Oxford, UK: Oxford University Press.

Ndikumana, L., L. Pickbourn, T. Mannah-Blankson, J.K. Boyce, H. Fofack and A.S. Ndiaye. 2015.
“The Role of Foreign Aid in Post-Conflict Countries”. Working Paper No. 405, Political Economy
Research Institute, Amherst, MA.

Ndikumana, L., and T. Mannah Blankson. 2015. “Financing Domestic Investment in African
Countries: Does the Source of Financing Matter?” Journal of African Development 17 (2): 21–44.

OECD (Organisation for Economic Co-operation and Development), WTO (World Trade
Organization) and UNCTAD (United Nations Conference on Trade and Development). 2016. 16th
Report on G20 Trade and Investment Measures. Paris.

Schaffer, M.E. 1998. “Do Firms in Transition Economies Have Soft Budget Constraints? A
Reconsideration of Concepts and Evidence”. Journal of Comparative Economics 26 (1): 80–103.

Stone, S., J. Messent and D. Flaig. 2015. “Emerging Policy Issues: Localisation Barriers to Trade”.
OECD Trade Policy Paper No. 180, Organisation for Economic Co-operation and Development,
Paris. http://dx.doi.org/10.1787/5js1m6v5qd5j-en.

UNCTAD (United Nations Conference on Trade and Development). 2015a. “Building the African
Continental Free Trade Area: Some Suggestions on the Way Forward”. UNCTAD Policy Paper.
New York and Geneva. http://unctad.org/en/PublicationsLibrary/ditc2015misc1_en.pdf.

AFREXIMBANK  AFRICAN TRADE REPORT 2017  115

———. 2015b. Review of Maritime Transport. UNCTAD Report. New York and Geneva

USAID (United States Agency for International Development). 2016. “Domestic Resource
Mobilization”. Washington, DC. https://www.usaid.gov/what-we-do/economic-growth-and-
trade/domestic-resource-mobilization.

USDA (United States Department of Agriculture Production). 2017. Supply and Distribution,
Foreign Agricultural Service.

Vos, R., M. Sánchez and K. Inoue. 2007. “Constraints to Achieving the MDGs through Domestic
Resource Mobilization”. Department of Economic and Social Affairs (DESA) Working Paper No.
36, United Nations-DESA, New York.

WEF (World Economic Forum) and the Boston Consulting Group. 2014. Strategic Infrastructure
Steps to Operate and Maintain Infrastructure Efficiently and Effectively. http://www3.weforum.
org/docs/WEF_IU_StrategicInfrastructureSteps_Report_2014.pdf.

WEF (World Economic Forum) and Global Alliance for Trade Facilitation. 2016. The Global
Enabling Trade Report 2016. Washington, DC. Weisskopf, T.E. 1973. “Dependence and
Imperialism in India”. Review of Radical Political Economics 5 (1): 53–96.

Whitfield, L., O. Therkildsen, L. Buur and M. Kjær. 2015. The Politics of African Industrial Policy: A
Comparative Perspective. Cambridge, UK: Cambridge University Press.

World Bank. 2010. “Results Profile: China Poverty Reduction”. Washington, DC. http://www.
worldbank.org/en/news/feature/2010/03/19/results-profile-china-poverty-reduction.

WTO (World Trade Organization). 2015. World Trade Report. WTO: Geneva

———. 2016a. “Overview of Developments in International Trading Environment: Annual Report

by the Director-General.” Geneva.

2016b. World Trade Statistical Review 2016. Geneva.

———. 2017. “Trade Recovery Expected in 2017 and 2018, amid Policy Uncertainty”. Press
Release 793. Geneva. www.wto.org/english/news_e/pres17_e/pr791_e.htm.

Zhang, Li. 2016. “Rebalancing in China–Progress and Prospects”. IMF Working Paper, WP/16/183,
Washington, DC.

116  AFREXIMBANK  AFRICAN TRADE REPORT 2017

 HEADQUARTERS
72(B) El-Maahad El-Eshteraky Street,
(Opposite Merryland Park) Heliopolis,
Cairo 11341, Egypt
Postal Address: P.O. Box 613 Heliopolis,
Cairo 11757, Egypt
Tel: +20 2 24564100/1/2/3

ABUJA BRANCH
No. 2 Gnassingbe Eyadema Street,
Asokoro, Abuja, Nigeria
Postal Address: PMB 601 Garki, Abuja, Nigeria
Tel: +234 9 4603160

HARARE BRANCH
Eastgate Building, 3rd Floor, Gold Bridge
(North Wing), 2nd Street,
Harare, Zimbabwe
Postal Address: P.O. Box 1600 Causeway,
Harare, Zimbabwe
Tel: +263 4 700941/904

ABIDJAN BRANCH
Angle Boulevard Botreau Roussel,
Rue Privée CRRAE – UMOA
Postal Address : 01 BP 5634, Abidjan 01, Côte
d’Ivoire
Tel: +225 20 307300

WEBSITE
www.afreximbank.com
African Trade Report
2017