Multilateral development finance institution the Arab Bank for Economic Development in Africa (Badea) has released its inaugural ‘2023 Africa Export Competitiveness Report’.

The report is aimed at helping to address crucial trade challenges and drive inclusive growth to unleash the continent’s untapped export potential, the bank says in a statement.

Despite its potential, intra-African trade remains low at 14.12% of total trade, hindered by infrastructure issues and corruption, the report indicates.

While efforts are under way to boost continental integration, external trade with Asia and Europe still dominates.

In 2022 and 2023, Africa’s exports, mainly minerals and IT services, reached $665.4-billion but were still below 3% of global exports.

South Africa, Morocco and Nigeria led the export market.

Asia, particularly China, has surpassed Europe as the main export destination.

Diversification and investment are key to enhancing Africa’s global competitiveness, the report states.

It shows that Africa’s export performance faced considerable challenges.

The continent’s underperformance in the realm of exports can be largely attributed to the absence of an ecosystem necessary for nurturing a strong export ecosystem, the report avers.

It provides key recommendations for African nations to enhance their export competitiveness.

This includes diversifying and expanding export sectors, investing in research and development, improving export infrastructure and promoting export diversification through innovative incentives and strong support to develop new, profitable export sectors and niches.

Most countries analysed in the report lag in formulating export promotion policy.

The report calls for them to develop and implement a comprehensive export promotion policy that addresses all aspects of export development, from production to marketing; reduce trade barriers and tariffs to facilitate the export of goods and services using regional trade agreements and free trade agreements; and provide financial and marketing incentives to exporters.

The report also suggests investing in developing robust road, port and air infrastructure to improve transport connectivity.

Efficient logistics remain the key requirement to reduce transport costs and transit time, it points out.

It also stresses the need to ensure quality and affordable access to electricity and Internet facilities.

The report emphasises the need to combat corruption and ensure the rule of law is upheld.

It suggests strengthening governance and administrative structures to promote transparency, accountability and progress, as well as improving the regulatory environment for businesses.

It also underlines the need to invest in education and training to nurture a skilled and innovative workforce.

This includes emphasising tertiary school enrolment and innovation capabilities; promoting innovation, research and development; and encouraging the transfer of technology from developed countries.

The report posits that a growing and affluent middle class is imperative for addressing challenges to the sophistication of demands.

In this regard, it calls for reduced income inequality and promotion of inclusive growth, and investment in infrastructure and social services to improve the social progress of the region.

It also highlights the need for a business-friendly environment to attract foreign direct investment.

This would entail learning from the best practices of countries such as Mauritius and Morocco, it avers.  

The report also suggests policies to stimulate manufacturing growth, which are highlighted as crucial for business dynamism and export competitiveness.

It also calls for simplifying administrative processes and reducing bureaucratic hurdles to streamline business operations.

The report says countries need to analyse export performance data to identify areas for improvement, develop targeted interventions to support specific export sectors or industries and promote export diversification to reduce reliance on a few key products or markets.

REPORT RELEASE

Badea’s recent fiftieth anniversary event, held in Accra, Ghana, also celebrated the launch of the Arab-Africa Financial Consortium, aimed at enabling a new era of economic collaboration and growth for the continent.

The inaugural report was prepared in collaboration with capacity development institution the African Capacity Building Foundation (ACBF), pan-African organisation Shift Impact Africa, the Institute for Competitiveness Africa (IFCA) and the Institute for Competitiveness India.

It examines the export capacity and ecosystems of 30 African countries, outlining the main factors and obstacles influencing Africa’s export competitiveness.

The key findings aim to provide a comprehensive understanding of the continent’s economic landscape, complexities, and main drivers to foster an intensification of intra-African trade and African exports.

“Private sector development is a cornerstone of Badea’s 2030 Strategy, as we recognise the crucial role entrepreneurship and private enterprises, especially small and medium enterprises, play in driving economic growth.

“We are committed to creating an enabling environment for the private sector to thrive and seize export opportunities under the African Continental Free Trade Area, enabling the continent to compete on a global scale,” says Badea president Dr Sidi Ould Tah.

The report was developed with the single purpose of becoming a regular benchmark publication and reference in its field.

“We hope policymakers, development partners, and business leaders across Africa will reference it as a key decision-support tool. It sheds light on strategic investments in infrastructure required as a foundation for Africa’s economic competitiveness, providing invaluable insights to guide the design of skills development programmes and helping stakeholders to shape regulatory reforms to improve the continent’s overall competitiveness,” says ACBF executive secretary Mamadou Biteye.

The report offers an aggregated overview of the continent’s competitiveness based on Professor Michael Porter’s foundational competitiveness framework.

“Our data-driven benchmark methodology evaluates the export performance of African nations, assessing export-related competitiveness and fostering peer-to-peer learning by highlighting best practices.

“The report further analyses export conditions, underscoring fundamental drivers and challenges. By assessing national export capacities and ecosystems, 30 out of 54 African countries were assessed based on their current performance. In its pilot phase, ongoing evaluations will build upon this foundation with a commitment to including all African nations in future editions of the report,” explains Institute for Competitiveness India honorary chairperson Dr Amit Kapoor, who is also visiting scholar at Stanford University.

“The release of this inaugural report is timely and urgent as Africa navigates a complex global landscape marked by geopolitical, economic and environmental challenges.

“The collaborative process behind the report exemplifies the multi-stakeholder partnership approach essential for driving sustainable economic transformation in Africa and underscores the need for immediate action,” says Shift Impact Africa CEO Tiekie Barnard.