A report published by Duplo, a comprehensive suite of solutions focusing on simplifying and optimizing financial management for mid-sized and enterprise businesses, has noted that Nigeria, Egypt, Morocco, Algeria, and Angola account for approximately 60% of extra-African exports.
The report also highlighted that Africa’s share in global trade remains below 3%, indicating a relatively static scenario. Although there have been significant shifts in trading patterns in recent years, these are likely to influence the nature of African trade in the near future.
Titled “The State of Cross-Border B2B Payments in Africa and Its Impact on Trade,” and published in August 2024, the report further highlights macro trends shaping the landscape of extra-African trade and the factors driving its increase.
It noted that Asia has overtaken Europe as Africa’s largest trading partner. This shift is primarily driven by Asia’s rapid economic growth and its increasing demand for African commodities. The reorientation of trade flows towards Asia represents a significant change in Africa’s traditional trading relationships.
However, in terms of resource diversification, the global push towards renewable energy and green technologies continues to drive the demand for Africa’s mineral resources. Countries and companies are seeking to diversify their sources of critical minerals, positioning resource-rich African nations as key players in global supply chains.
The report also underscores that economic trends towards deglobalization and reshoring are causing a fragmentation in Foreign Direct Investment (FDI) flows. This shift is repositioning Africa as an alternative investment destination, particularly for manufacturing and services sectors. As companies seek to diversify their supply chains and reduce dependence on traditional manufacturing hubs, Africa stands to benefit from increased investment and trade opportunities.
Meanwhile, the emergence of a multipolar world order, characterized by renewed great-power competition, is influencing trade patterns. This is exemplified by the economic tensions between the United States and China and geopolitical events such as the war in Ukraine. These dynamics are fueling a race to secure access to strategic resources in Africa, particularly oil and critical green minerals.
The report also underscores that digital transformation, coupled with the increased presence of global payment platforms, has brought about a seismic shift in extra-African trade. This shift is reshaping the way businesses conduct international transactions, offering faster, more efficient, and more transparent payment solutions.
“Major global card networks such as Visa and Mastercard have made substantial inroads into the African market. These companies leverage their global infrastructure and technology to facilitate smoother cross-border transactions for African businesses. Their expansion provides more payment options and contributes to the overall digitization of financial services across the continent.”
“Other digital payment platforms are also making their mark. This expansion enables African businesses to more readily accept payments from customers worldwide, thus facilitating their participation in the global digital economy.”
“A significant development in cross-border payments has been the introduction of SWIFT’s global processing innovation (SWIFT GPI) in 2017. This initiative aims to improve interoperability by establishing an enhanced common standard for cross-border payments.”
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