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AFRICA’s exports experienced significant growth in 2023, with total exports reaching $665.4 billion, a 16.8% increase over 2022.
This growth was primarily driven by minerals and IT services. Despite this progress, the continent’s share of global exports remains modest, constituting less than 3%.
South Africa, Morocco and Nigeria led the continent’s export market, with Asia, particularly China, now surpassing Europe as the main export destination.
According to the Africa Export Competitiveness Report 2023, the world recovered considerably from the lows of the pandemic in 2023, total world merchandise exports stood at $7.2 trillion, which is far higher than before the pandemic.
Africa’s trade seemed to be aligned with the world trend as it registered $665 billion in merchandise exports, which is 16.8% higher than in 2022.
It said African export of services in 2023 stood at $132 billion, an increase of 30% over 2022.
It indicated that the percentage increase in African services exports was even higher than experienced by the world as a whole during the same period.
“Despite recording the highest global trade value for merchandise goods and services in 2022-23, Africa has yet to position itself as a leading export hub.
It can be seen by the fact that the share of Africa in total merchandise exports has not crossed the level of 3% since 2014, standing at a mere 2.67% as of 2022,” the report said.
It said over the past decade, Africa's average share of global merchandise exports has been just 2.84%, the lowest among all continents except Oceania and significantly, lower than Asia, which had an average share of 39% during the same period.
A similar trend can be seen in the share of services exports. Africa has not been able to cross a 2% threshold since 2016 and has averaged 1.90% in the past 10 years, significantly lower than Asia and Europe averaging 28.3% and 49.18% respectively.
The report said mining, agricultural and extractive products heavily dominate Africa’s merchandise exports.
It said in 2021, minerals constituted 39.57% of all exports, followed by precious stones at 17.82% and agricultural products at 12.91%.
It added that the continent had seen a shift in its export composition, with a notable increase in the share of precious stones and a decline in petroleum products, particularly after the 2014 oil price drop.
“In the period 2000-2021, we see that metal products’ share in exports has not varied much ranging from around 4%-8%. The share of agricultural products has seen a U-shaped trend in recent years with agricultural products reaching a level of 16.05% in 2002 and then falling to their lowest share in 2008 at 8.8% before rising back to its 2002 levels by 2020.
The share of stones in the merchandise export basket has seen significant and continuous increases from 7.53% in 2000 to 17.82% in 2021, showcasing a shift from mineral products but still expanding into a primary industry,” it stated.
The report said Foreign direct investment (FDI) in Africa amounted to $44 billion in 2022, a significant fall from the record-breaking $80 billion in 2021.
It said the fall in Africa’s FDI inflow aligned with global trends as FDI inflows declined by 12% in 2022 from $1.47 trillion in 2021 to $1.3 trillion.
“Africa’s share of global FDI amounted to 3.47%, which is the lowest among the continents. Africa’s share in global FDI has remained below 5% for more than two decades except for 2021.
In 2022, around 50% of the FDI inflow was received by just five countries, namely Egypt, South Africa, Ethiopia, Senegal and Lithuania having shares of 25.3%, 20.1%, 8.1%, 5.75 and 4.7%, respectively,” it said.
This, it said highlighted the uneven distribution of FDI in African countries, resulting in unequal access to foreign capital among these nations.
“In 2022, renewable energy, power and petrochemicals were the main sectors receiving international finance projects in terms of total value; renewable energy was the leader in terms of number of projects announced.
Among the greenfield projects, the communication and information sector garnered the highest number of projects for the same year,” the report added.
It said Africa’s export landscape faced multifaceted challenges, including inadequate infrastructure, limited access to finance and insufficient research and development.
It explained that Africa stood as the world’s most underbanked region, with approximately 80% of its one billion inhabitants lacking access to formal banking services, a stark contrast to the global average where 69% of adults have a bank account.
Moreover, it said “broader access to banking services in Africa is far from satisfactory. The continent maintains a meagre 7.5 bank branches and 13.3 ATMs per 100,000 people, significantly lagging behind the global average of 18.9 bank branches and 48.3 ATMs per 100,000 individuals.”
“This lack of access to adequate finance discourages exporters from entering the export market and prevents them from expanding their business to more markets,” it added.
In conclusion, Africa’s export landscape presents a multifaceted challenge that encompasses inadequate infrastructure, limited access to finance and a scarcity of research and development efforts.
Access to power and the internet, as well as transport connectivity, are vital pieces of the export puzzle that require substantial improvements.
It said while the road ahead was challenging, it is important to recognise that addressing these challenges can lead to enhanced export competitiveness.
To revitalise Africa’s export performance, the report said there was a pressing need for increased investments to meet infrastructure deficits.
