Intra-Africa Trade Can Boost Africa’s Economy-DHL

Hennie Heymans

African countries need to focus on Intra-Trade and rid some of the barriers affecting cross border trade for the continent to realize substantial economic growth, says one of the leading global brand in the logistics industry, DHL. 

Latest IMF April 2016 World Economic Outlook report, indicates, developing economies and emerging markets will continue to account for a large portion of the world’s economic growth in 2016, which is expected at a rate of 3.2%. And growth in sub-Saharan Africa is also expected to remain low this year, at 3%, down 0.4% from 2015. 

In a statement, CEO of DHL Express Sub-Saharan Africa, Hennie Heymans, underlines that regional integration has enormous potential to catalyze investment and foster growth on the continent but mentions that there are several obstacles that are affecting businesses.

Heymans has mentioned intra-African trade costs that according to recent World Bank report, are estimated to be approximately 50% higher than in East Asia due to the number of permits required when transporting goods across certain borders, or the fees payable for prolonged waiting periods at the border. 

The varying de minimis values have also been named as big challenge for companies to plan market expansion strategies across the region and the statement mentions Angola where the de minimis values is USD 350 (if imported via Luanda) and  Zimbabwe, the de minimis is USD 10 as examples.

“On the contrary, a new law in the United States has simplified shipping to the U.S. by raising the import de minimis limit from USD 200 to USD 800, which means that goods below USD 800 will not require formal customs procedures and will not be liable for duties or taxes.” added Heymans

He has therefore underlined that ability to boost connectivity and intra-Africa trade will help to move Africa forward and has called upon all key players to work together to create sustainable and inclusive environment and work on solutions to make it easier for African businesses to conduct business within their local and regional environment.

“To ensure that Africa is equipped to maintain and exceed its growth trajectory of 4% in 2017, business leaders, the government and the community need to work together towards making Africa an easier place to do business and to stimulate trade between the various African countries.” 

“Trade blocs such as SADC (Southern African Development Community), EAC (East African Community), ECOWAS (Economic Community of West African States), all promote cross-border trade and are focused on facilitating trade and reducing bureaucracy within the region. However, more needs to be done to connect and encourage the movement of goods, services, people and capital across borders in Africa.” pleaded Heymans 

Heymans has indicated that comparing intra-regional trade statistics, Africa rates are amongst the lowest in the world.

He said this is the case because less than 20% of what is produced in the region, is remaining on the continent as over 80% of what is produced in Africa is exported, mainly to the European Union, China and the United States yet in comparison, over 65% of Europe’s trade occurs on its own continent, and in North America, the figure is around 50%.