09:27 pm
20 October 2016

East Africa is Africa’s New Trade hub, Barclays’ experts say

East Africa is emerging as a promising hub for international and intra-regional trade to rival sub-Saharan Africa’s two ‘heavyweight states’ of South Africa and Nigeria, according to the inaugural Barclays Africa Trade Index released on 10 September 2015.

“East Africa performs well on the overall index, a reflection of the region’s large populations and fast growing economies together with some positive aspects of trade openness,” reads the analysis.

“In addition, East Africa benefits most from relatively strong border administration and a fast growing regional market,” it further emphasises.

“Many countries, particularly in East Africa, have invested in major developments in both infrastructure and ‘soft’ infrastructure such as tariffs and border policies,” said Matt Tuck, head of global corporate banking at Barclays

The East African Community (EAC) introduced a single customs territory last year, which was lauded by Erich Kieck, Director for Capacity Building of the World Customs Union, who stated that it “has done remarkable work simplifying the control of goods moving across the customs union”.

This was further reiterated last week by Tuck who welcomed the development of “one-stop” border posts, where instead of each country managing its own post, two countries are responsible for a single customs check.

Referring to specific countries, the Index ranks Kenya as third overall for market opportunity and access, describing the country as playing the role of a regional leader, offering logistics routes and administrative solutions to facilitate cross-border trade, as well as pushing for regional policy on areas of policy, infrastructure and administration. In addition, fast-growing Tanzania and Ethiopia are also ranked among the top 10 performing countries, placed 5th and 6th respectively.

Furthermore, it notes that Members of the EAC, as well as the Southern African Custom Union (SACU), present regional bright spots in terms of better global supply chain integration, especially South Africa, Ethiopia, Kenya and Tanzania. These countries have had some success in incorporating industries such as manufacturing, agriculture and agri-business, transport and tourism into global and regional value chains.

“Regional value chains are emerging as a result of infrastructure development, financial integration and the freer movement of people across regional economic communities, particularly within the EAC, SADC and ECOWAS,” the Report emphasises.

Finally, on the issue of intra-regional trade and investment, the report announces that intra-regional trade is gaining a more prominent role in the trade landscape of Sub-Saharan Africa, representing 17 percent of total trade flows. Still, it lags far behind other regions of the world in terms of intra-regional trade flows, such as Europe (66 percent), Asia (48 percent), North America (32 percent) and Latin America (20 percent), it notes. Intra-African investments have also risen by 8 percent between 2009-2013.

The Report, intended to explore the significant opportunities for UK business, reached these conclusions following a comparison of 31 Sub-Saharan African (SSA) countries based on their attractiveness for cross-border trade.