East Africa and its community members are increasingly trading with one another and with other African countries and this has reduced their trade interaction with Europe, Asia, and other parts of the world,
This latest development has helped in shaping the intra-Africa trade dream projected to boost commerce and livelihoods on the continent.
It also signifies that nations in East Africa are actively participating in the broader African agenda of intracontinental trade, thereby bolstering their economies and lessening Africa’s reliance on external sources.
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According to the East African, the seven countries in the region increased their trade with the rest of Africa by $584.6 million to $4.3 billion in the fourth quarter of 2023. The increase represents a 14% increase compared with a similar period in 2022 per the latest data by the EAC secretariat.
Cross-border trade within the East African region also recorded a 12% rise surging from the previous year’s $2.6 billion to $2.9 billion in last year’s Quarter 4.
During quarter 3 of last year, trade between East African countries rose 20% to $3.2 billion a height never reached before by trade within the region for two years.
In the same vein trade between East African countries and the rest of Africa crossed a $5 billion mark for the first time in two years.
Trade between East African countries and the rest of Africa is showing promising growth, while the situation is quite the opposite when it comes to trade between East African nations and the international community.
Trade Within East Africa And Other Part Of The World
The trade between East African countries and European Union countries which usually accounts for 10% of EAC total trade witnessed a significant 14% drop from $2.04 billion in the three months to December 2022, to $1.7 billion in the last quarter of 2023.
The United States, ranking tenth as a trade partner in East Africa, experienced a 19% decrease in trade with the region, dropping from $200 million in the October-December period of 2022 to $161 million in the following year.
A decline in trade between East African countries and their major Asian partners, such as Pakistan, Malaysia, China, Vietnam, Indonesia, and Korea, was also witnessed in Asia.
Imports to China showed significant improvement but exports to the Global economic powerhouse dropped by 12% signaling that East African countries are finding markets elsewhere.
Germany, Italy, and Switzerland saw their trade with the region drop by 12 percent, 2 percent, and 23 percent respectively. The drop pushed Germany out of the rank of the 10 leading trade partners for the region.
In each of these countries, imports and exports registered a general decline, except in the case of Germany, which bought more of East African exports in the period but sold much less of their products in the region.
Exports to Malaysia, which is the fourth leading market for East African goods, also posted a 17 percent drop in the period, even though imports from the country rose by 47 percent.
Amidst the decrease in trade volume between East African nations and the EU, Asia, and the United States, the EAC countries are discovering fresh and promising business alliances within Africa.
For example, trade between East Africa and the Economic Community Of West African States (ECOWAS) tripled from $61 million in 2022 to over $199.6 million last year.
Similarly, trade with the Southern African Development Community (SADC) improved by 40% to $2.7 billion.
The overall outlook paints an increase in trade between African countries cutting the continent’s dependency on the outside world.
This comes at a time when African leaders are advocating for a heightened execution of the African Continental Free Trade Area, to foster greater trade among African nations and uplift 65 million individuals from poverty.
- What To Know
South Africa is the leading trade partner for EAC countries on the continent, with the trade between them rising by 26 percent. Trade between South Africa and EAC countries hit $838 million, up from $664 million in the last quarter of 2022. - Africans are encouraged to trade more within themselves turning the continent of over 1.4 billion people into one giant marketplace. This will help reduce poverty in the continent and cut down the continent’s dependency on the outside world.
Backstory
Previously, businesses in the East African region have been blamed for taking advantage of preferential trade agreements with countries outside the continent rather than free trade agreements within their local regional trading blocs.
A study done by the United Nations Conference on Trade and Development (UNCTAD) and the Common Market for Eastern and Southern Africa (Comesa) last year found that African countries generally take advantage of PTAs with the US, Canada, EU, and Japan, more than they utilize FTAs within their regional economic communities.
