Africa still the world's least connected continent - CNBC Africa

Africa still the world's least connected continent

Special Report

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More formal trade agreements need to be implemented between African countries. PHOTOS: Pi3.co.za/Celaw.com

“The DHL Global Connectedness Index revealed that Africa is the world’s least connected continent, when considering the ease of moving people, trade, information and finance.  All African countries should therefore be focused on developing connectedness on the continent and building trade relationships,” said Charles Brewer, managing director of DHL Express sub-Saharan Africa.

He added that there is too much focus on doing business with countries outside of Africa such as China and the United States (US).

(READ MORE: China-Africa trade now 2000 times more than in 1960 )

While international trade agreements such as the African Growth and Opportunity Act (AGOA) and the Economic Partnership Agreement between European Union and Southern Africa are positive for the continent, it does not place emphasis on intra-Africa trade.

According to the index, only 20 per cent of Africa’s produce remains within the region, indicating that over 80 per cent of produce is exported, mainly to China, the US and Europe.

By comparison, 60 per cent of Europe’s trade remains within the region and in North America, around 40 per cent.  

A big challenge that Africa faces however is a lack of infrastructure.

(READ MORE: Intra-Africa trade still hampered by infrastructure deficit)

“Under developed infrastructure directly impacts the speed at which goods are moved into, out of and across the region. It also drives up logistics costs, and it is estimated that supply chain costs are up to nine times more expensive in Africa in comparison to other regions in the world. These inflated costs also ultimately hamper economic growth in the region,” explained Brewer.

African countries need to focus on developing and implementing trade agreements that will make trade between the regions more convenient.

“Angola is the only country in Africa that has a formal and declared de minimus, and whilst all other sub-Saharan Africa countries have informal agreements, the fiscal clearance levels vary greatly. For example, in Tanzania, anything with a value greater than five US dollars will require formal clearance, which creates an additional administrative burden and potential clearance delays with minimal returns for the government in terms of duty revenues,” he concluded.

“With that said, the situation is improving, and more countries are recognising that they need to find ways to make their markets accessible and easier to do business with. A great example for the region is Rwanda, who is looking to strip away bureaucracy, remove the red tape and make their country an attractive destination for trade and investment. More African countries need to follow this example, and the region will reap the rewards.”

(READ MORE: African leaders take on a proactive approach to intra-Africa trade)

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