Africa’s trade with the developed world: Reflecting on trade preference schemes (Part II)

By Rafiq Raji

ssa us exportsssa eu exports

Sub-Saharan Africa (SSA) exports to the United States (US) has been declining since 2011. At USD40bn in 2013, it was a 50% drop from three years earlier. It is set to decline further in 2014. This is because natural resources (especially crude oil) dominated SSA exports hitherto. As increasing shale gas production brings the US closer to becoming a net exporter of crude oil, this is set to change. Consequently, SSA crude oil producers have sought new customers in Asia. In July 2014, Nigeria did not ship a single barrel of crude oil to the US. This is the beginning of a trend that is likely to be pervasive amongst SSA crude oil producers. This new crude oil market dynamics make it more likely the declining trend in SSA-US exports would worsen in 2014-15. The resource-rich SSA countries of Angola, Nigeria and South Africa have consistently accounted for at least three-quarters of SSA exports to the US since 2005. The same resource-rich SSA countries account for a significant portion (64%) of the sub-continent’s exports to the European Union (EU). However, the structure is relatively more diversified.

In light of the aforementioned, it seems paradoxical that one would adjudge AGOA a relative success. That potential confusion is defused when you “clean up” (discount crude oil and other natural resources) SSA exports to the US. Otherwise, the trade structure is not dissimilar from that of the sub-continent with other regions. According to US International Trade Administration (ITA) data, non-fuel AGOA US imports was USD4.9bn (18% of total AGOA imports of USD26.8bn) in 2013. The positive trend in textile and apparel exports to the US is why AGOA is praised. In 2013 for instance, SSA textiles and apparel exports to the US increased by 11%. These are the types of exports that generate jobs and contribute to growth. It is trends like this that the performance of trade preference schemes should be judged by. So although US-SSA trade has been declining, the positive trend in light manufacturing exports (textiles and apparels) point to the effectiveness of AGOA. In contrast, that type progress is not discernible from EU-SSA trade. For instance, manufactures constituted just 3.7% of 2013 EU imports from West Africa. More progress is seen in Eastern & Southern Africa (ESA), with manufactures constituting 28% of 2013 EU imports. In SADC, it was 32%. So it varies.

Views are mine and not that of any institution(s) I may be affiliated with.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s