The World Bank Chief Economist for Africa region, Albert G. Zeufack, has called on policymakers to develop policies that are export-oriented toward Asia to support faster economic growth and transformation. This call comes amid the turbulent times of the coronavirus pandemic; as global competition has seen the gradual restructuring of international trade policy.
Available data point to an increase in trade between sub-Saharan Africa and Asia – from 13 percent in 1997 to 26 percent in 2016 for exports, and from 20 percent to 36 percent for imports. This has largely been on the back of intensified trade relationships with China and India. The composition of Africa’s exports to Asia is primary commodities related to energy, metals and minerals, and agricultural raw materials. Africa has also diversified its sources of imports over the past decade.
Presenting on the prospects of trading with East Asia during the launch of the World Bank book dubbed ‘Africa in the New Trade Environment’, the Chief Economist indicated that assessment of the changing demand patterns of Asia’s growing middle-class informs of export diversification options for sub-Saharan African countries.
“The prospects for gains in structural transformation will be enhanced by the ongoing restructuring of economies in East Asia, mainly China, and by committed leadership for reform and the building of firm and state capabilities in African countries.”
Highlighting the growing middle-class and increasing demand from East Asia, accompanied by rising relative wages along with the shifting structure of global value chains (GVCs), the Chief Economist said this may offer new economic opportunities for sub-Saharan Africa.
However, to tap this rising potential, Mr. Zeufack said, sub-Saharan African policymakers must further deepen their trade ties with Asia. “Building on the achievements of recent periods, countries should strengthen their positions in this ‘hub-and-spoke’ pattern of trade.
“Countries that invest in reforming their institutions – including strengthening the rule of law and contract enforcement mechanisms, reducing rent-seeking activities in specific markets, and reducing risks of political instability – would see increasing trade with Asia and the benefits from such trade.”
Although the region’s exports to Asia remain highly concentrated in resource-intensive products such as petroleum, minerals, metals and other primary goods, a few African countries are diversifying their export portfolios following the export boom to Asia.
It is expected that countries which invest in reforming their institutions – including strengthening the rule of law and contract enforcement mechanisms, reducing rent-seeking activities in specific markets, and reducing risks of political instability – will see increasing trade with Asia and the benefits from such trade.