Africa Insight

Covid-19 and African Trade Performance

Hassan O. Ozekhome — 2024-04-25

The Covid-19 pandemic led to significant disruptions in socio-economic activity across the globe, particularly trade disruptions that resulted in diminished trade performance stemming from border closures, trade restrictions, and confinement measures. This prompted this study. The empirical results from using panel data from 30 African countries and the fully modified ordinary least squares and system Generalised Method of Moments estimation techniques demonstrate that the pandemic caused significant deterioration in Africa’s external trade because of trade restrictions, disrupted production and supply chains (a continental supply shock), and the demand slump associated with the lockdowns. The study recommends robust and results-oriented shock-mitigating measures to ensure economic resilience, and well-timed policy responses to address external shocks and uncertainties like the Covid-19 pandemic.

The knock-on effects of the Covid-19 pandemic on the Mauritius – Africa preferential exports

Pydayya Rajeev — 2024-04-25

This paper probes into the dynamics of utilising various Mauritius–Africa trade agreements amidst the challenging economic context of the Covid-19 pandemic. Leveraging six years’ of export data, the findings reveal an unexpected trend in the utilisation of African trade agreements, with preference utilisation rates reaching a peak in 2020. Despite the effects of the pandemic, exporters demonstrated a tendency to use trade preferences for specific products, including live animals and animal products, refined cane sugar, preparations for animal feeding, knitted textile accessories, and aluminium bars. Preference margins and the value of exports encourage exporters to use trade preferences. However, an increase in trade-related costs has counterintuitive effects on the preference utilisation within the COMESA and SADC regions. To optimise the utilisation of these agreements, Mauritius needs to foster and strengthen a sustainable and resilient supply chain with higher connectivity across member states.

Global value chain participation of selected African countries

Samson Edo — 2024-04-25

This paper explores the relative effects of the initial economic factors and the emergence of the Covid-19 pandemic on the participation of selected African countries in global value chains (GVCs). The study covers the period from the first quarter of 2010 to the second quarter of 2022, and builds upon existing GVC participation theories. It employs the unrestricted error-correction and dynamic ordinary least squares models. The estimation results reveal that initial factors affected GVC participation positively, while the Covid-19 pandemic had an adverse effect. The policy implications of these findings are significant. Firstly, GVC participating African countries seem to have benefited from participation, primarily due to major economic factors predating Covid-19. Stabilising these factors is crucial to sustaining participation benefits. Secondly, the pandemic disrupted these benefits, and there was a need to support severely affected firms. Lastly, the active participation of a limited number of African countries indicates the importance of creating a favourable environment for more countries to actively engage their local industries in GVCs.

Trends in India–Africa trade and investment relations

Aparajita Biswas — 2024-04-25

India’s historical engagement with Africa dates to the early independence movements across the African continent. However, its current involvement represents a shift in scale and depth. Initially, India viewed Africa through the lens of emerging Afro–Asian solidarity between developing countries, with a focus on infrastructure development, including providing finance and constructing railroads in East Africa. Its support extended to setting up small-scale industries in Tanzania and Kenya, as well as joint ventures in textiles. Over the subsequent decades, India provided technical expertise, doctors, educational scholarships and various forms of aid under the Indian Technical and Economic Cooperation programme. Early in the twenty-first century, following India’s economic reforms of the 1990s, the scope of India–Africa cooperation expanded significantly. This study aims to assess the prospect of bilateral trade and investment in facilitating economic cooperation between India and Africa in the years to come.

Transforming challenges into opportunities

Omphemetse S. Sibanda — 2024-04-25

This study investigates the impact of the Covid-19 pandemic on African trade dynamics, and explores potential redress measures that can be employed to mitigate its adverse effects. In particular, the study is contextualised with reference to the significance of trade as a development vehicle for Africa within the framework of the African Continental Free Trade Area (AfCFTA) agreement. Through a review of academic literature and online news media, this research explores existing evidence and explores the micro- and macro-economic implications of Covid-19 on Africa’s external trade. Africa’s first positive case of Covid-19 was recorded in Egypt on 14 February 2020, followed by Nigeria on 27 February 2020, and from there onwards Algeria, Cameroon, Morocco, Senegal, South Africa, Togo and Tunisia. Covid-19 has had significant effect on global output, which the International Monetary Fund estimates to have fallen by 3.5 per cent in 2020. African countries have been affected differently, and the economic performance is not uniform across African regions and subregions with real gross domestic product growth of the West and Central Africa in 2022 being higher than that of East and Southern Africa. Empirical evidence demonstrates the varied impacts across different African economies, with sectors such as tourism and oil-exporting industries particularly hard-hit. This study proposes strategic recovery measures aimed at bolstering Africa’s resilience and revitalising its trade landscape. Recommendations include intensifying economic diversification, leveraging digitalisation to streamline trade processes, and investing in the agricultural sector to exploit comparative advantages. Furthermore, the study advocates the deepening of regional integration, and the fostering of intra-Africa trade, particularly through initiatives like AfCFTA.

International trade and recovery strategies in Kenya in the context of Covid-19

Mohd Nayyer Rahman — 2024-04-25

No abstract.

Covid-19 and African external trade

Badar Alam Iqbal — 2024-04-25

No abstract.