Trade Policies and Regional Integration in Africa

Trade within Africa and its commercial relations with the rest of the world are changing quickly. This five-section chapter focuses on the diversification of Africa’s trade partners and products and the potential for further progress. It assesses global economic developments, explains the eight regional economic communities, their policies and integration initiatives, and provides ideas on how Africa’s private sector can maximise opportunities presented by regional and global value chains.

As the world evolves into a single highly interconnected global market, prosperity no longer depends just on a country’s productivity but also on its strategic choice of trading partners, export products and policies. Africa’s growth in recent years has been helped by advances in trade, policies, the regulatory environment and regional integration.

However, the widespread and uneven impact of commodity price shocks and criticism of the global trade system increase uncertainty about the future. Countries need to make the best use of globalization by further diversifying their trade away from resources, and increasing trade within Africa. Economic and political changes in China and the United States will have varying effects on Africa’s trade, but to counter risks, the continent must carry out structural and regulatory reforms, improve policy and investment climate, deepen regional integration and maintain its commitment to reform. Africa’s regional economic communities are instrumental to strengthening economies and building resilience against global shocks. Increased political commitment therefore, especially at national level, is needed to actualize regional integration agreements. The proposed Continental Free Trade Area could yield large gains from trade and bolster other development objectives.