Africa Region Working Paper Series No. 76

Salient Features of Trade Performance
in Eastern and Southern Africa

Abstract

This paper reviews the main trends in growth, direction, and structure of intra- and extra-regional trade in the eastern and southern Africa (ESA) region and its trading blocks (COMESA, SADC, SACU and EAC). The region's trade evolution over the 1990-2001 shows some troubling features. Unlike other developing countries, the ESA region has increased its marginalization in world trade. The declining share in world exports reflects export failure in some countries and growth failure in others. The main impact of such marginalization has been either a slowdown in imports or an increase in external debt. The share of intra-regional trade in region's total trade increased only marginally in all the trading blocks. Furthermore, such increase is concentrated mainly in two countries: South Africa and Kenya, which have large and growing trade surpluses with other countries in the region. Intra-regional trade is substantially lower in the ESA region than in other regional trading blocks. The region's export composition changed only marginally, unlike other developing regions, which experienced an increase in manufactured exports. As a result, there has been little change in the skill and technology intensity of exports in all trading blocks. Exports remain concentrated in non-fuel primary commodities and resource based and labor-intensive manufactures. The trading blocks' exports are generally growing at a lower rate than world exports - the share of dynamic products in the region is significantly low compared to other developing countries. ESA's challenge to reverse its increasing marginalization in world trade is to fully exploit its comparative advantage in agriculture and minerals through trade facilitation policies while diversifying also into other exports by gradually increasing the degree of primary good processing and increasing manufactured exports. Policies to make the export sector competitive and profitable need to be pursued relentlessly.

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