Africa’s share of world trade has fallen sharply since 1950.

Africa’s trade is overwhelmingly with OECD countries, particularly former colonial rulers.  Despite efforts at intra-African trade integration and promotion, trade flows among African countries remain very low (below 10% of total aggregate exports).  Intra-COMESA trade in 1993 accounted for around 6% of total COMESA trade.  In comparison, intra-regional trade averages around 20% among Southeast Asian and Latin American countries.

Underlying Africa’s low share of international trade is the continent’s heavy reliance on mainly unprocessed and semi-processed, low-value-added, primary commodities (copper, coffee, cocoa, groundnuts, logs, raw cotton, unmanufactured tobacco, iron ore, raw beet and cane sugar, palm nuts and kernels, natural rubber and gums, fresh bananas, palm oil, etc.).

Compounding this reliance on low-value-added exports, most African countries rely overwhelmingly on 1 or 2 main export commodities.  Coffee, for instance, accounts for around 95% of Uganda’s total export earnings, and over 65% of export earnings in Burundi, Ethiopia, and Rwanda.  Downward pressure on many primary commodity prices during the 1980s and much of the 1990s has hurt many African countries as well.

Africa’s poor terms of trade relative to developed countries have exacerbated a serious problem with external indebtedness among many African countries.  Several African countries -- among the world’s poorest -- are faced with heavy debt burdens which will be difficult at best to handle.

Among the most important factors needed for Africa to improve its competitiveness in the world trade arena include (according to the ECA): a well-educated labor force; an adequate (and more extensive) transportation infrastructure;  a cheap and reliable high-capacity telecommunications network; establishment and strengthening (especially in the direction of increased transparency and consistency) of institutions and laws governing private sector activities; simplified tax regimes; harmonized  product standards; a well-developed financial sector; a restructured and reformed public sector; privatization, deregulation, and cuts in subsidies; foreign direct investment; reduced trade barriers; and research, development, and adoption of production technologies.

Over the past decade, most African countries have adopted at least some of the policy reforms listed above.  Generally, those countries which have encouraged investment and restructuring in addition to macroeconomic stability have fared relatively well compared to those that have not adopted such policies.

According to the ECA, African regional trade integration can play an important role in enhancing Africa’s international competitiveness.  Removal of intra-African trade barriers ideally would be accompanied by reduction of external tariffs (currently among the world’s highest at around 28%) and non-tariff barriers (NTBs) to trade.

Actions taken by Africa’s trading partners (especially in the OECD)  also could  be very helpful.  These include such measures as reducing debt and encouraging African exports (i.e., by reducing duties on those exports).