Africa Economic Brief - The Bank’s Role in Fostering Regional financial Integration - Volume 12 | Issue 3

KEY MESSAGES

1. Africa’s share of global trade is a paltry 3 percent and intra-African trade is 15 percent. This is mainly due to underdeveloped cross-border infrastructure, a lack of intra-regional investment, and the difficulties of linking landlocked countries to international markets. By addressing these impediments, intra-African trade would receive a boost, allowing Africa to realize the gains of regional integration.

2. The trade finance gap for Africa is still high, standing at about USD 94 billion. To mitigate it, efforts to increase access to trade finance are highly recommended. Better access could be achieved through the Bank’s continual support to AfCFTA and regional economic communities’ efforts to deepen African market integration through trade facilitation, trade finance, and better cross-border payment systems.

3. Cross-border payment systems are still weak. In this frame of reference, the Bank should continue to support regional harmonization projects that promote cross-border trade and Africa’s banking sector, thus fueling the use of local currencies across the continent to foster regional financial integration in Africa. Moreover, promoting the use of regional currencies across Africa would significantly cut transaction costs and exchange rate fees.

4. With marginal progress in trade finance and cross-border payment systems observed only in Western, Southern, and Eastern Africa, it is necessary for the Bank to spread its support in such systems and trade finance to the northern and central regions.