Africa has been tagged by many researches and statistics as the “next big thing” due to a growing middle class with lots of fresh and under tapped ( if not untapped) business opportunities. With an estimated population of over a billion, the continent has a huge market potential but countries in the region have done little to harness the opportunities with such a huge market and instead have continually looked far to Europe, America or Asia to trade.
Regional blocs in other continents have been known to explore the full potential of transacting business within their respective regions. A research by the pan-African bank, Ecobank estimated that about 60% of Europe’s trade is within the E.U region, whiles in America the figure is estimated at 40% with similar situations in the Asia.
On the contrary, it is estimated that only 20% of Africa’s trade stays within the continent with the rest 80% targeted at the European, American and now the Asian markets.
While some trade agreements such as AGOA, EPA etc are supposedly tailored to promote international trade with Africa, the continent herself has not done enough to promote intra-regional trade.
It has become very common for local African manufacturers to immediately target these advanced foreign markets with the hopes of benefiting from these trade agreements. The irony however is that, African countries have not been able to fully utilize these trade agreements due to several reasons one of which is the inability for some African products to withstand competition on these advanced markets. This particular challenge has been attributed partly to the lack of intra-regional trade which could have exposed local businesses to some sort of competition at least at the regional level and exposed them to the rudiments of competition before entering the already advanced and competitive American, European or Asian markets.
One reason blamed for the lack of intra-regional trade has been the existence of multiple trade blocs in the region. with 14 different trading blocs, critics say that’s just too many. Most of these trade blocs have conflicting requirements with overlapping members where some countries belong to about 2 or 3 trade blocs.
Another challenge has been the infrastructural deficit in the region in terms of hinterland connectivity. This challenge limits the smooth flow of trade within the region and sometimes makes it more expensive transporting goods within the region compared to importing same goods out of the region.
Whiles some African countries and development partners are continually working to improve the challenge of hinterland connectivity, mention must also be made of the necessity for the continent’s leaders to structure better trade agreements which could promote regional trade irrespective of which sub-regional trade bloc a state belongs to.
In addition it is also very important to mention that in this day and age of technological advancements, African entrepreneurs should learn to take advantage of the internet to have an online presence for their businesses. In some instances, due to lack of information, a buyer in one part of Africa might not be aware of a supplier of a much needed service or goods at another part of the continent hence a potential trade opportunity might have been missed.
Africa needs to trade more within herself first before targeting the already saturated and competitive foreign markets.
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