Regional integration needs a boost  

Intra-African trade remains low at about 14.6% of total trade, with the push for closer integration being hampered by the failure of most African nations to meet the convergence criteria. These include keeping inflation below 7%, budget deficits at less than 5% of GDP, and a GDP-to-debt ratio of not more than 64%. 

Countries are also expected to have sufficient foreign reserves to cover at least three months of imports, while financing from the central bank should not exceed 5% of tax revenues. 

Delivering a report on regional integration, Karingi noted that in 2023, only 10 countries met all the five criteria, even though 39 countries complied with the guidance on import coverage and central bank financing, while 20 countries achieved the inflation target. 

“This limited the states’ policy actions that could improve integration,” he observed. This factor is also compounded by sluggish growth, conflicts in part of the continent and the continuing impact of the Covid-19 pandemic, he added. 

Implementing the Boosting Intra-African Trade Action plan could increase trade volumes, he said, noting that the African Continental Free Trade Area is already addressing some of the challenges. 

“A positive story is intra-African trade in services. In 2023, this reached about $27bn and so there might be some scope for acceleration there,” he reported. 

Karingi said infrastructure development was moving too slowly, with only 4,000km of new rail lines laid under Phase 1 of the Program for Infrastructure Development in Africa, a mere fraction of its 30,000km target. “Road density also remains very low, although there is good progress, especially among the North African countries,” he said. 

Full implementation of the single air transport market policy will also lead to the creation of 100,000 jobs and a further 267,000 in tourism related industries, Karingi projected.