Expanding global trade remains key driver of world...
The expansion of global trade over the last 50 years has created industries, jobs and value on an unprecedented scale, driving innovation and technological advances and, in the process, benefitting most countries, most of the time. Global and cross-border trade is the fastest contributor to growth, supports domestic trade, small and medium-enterprise formation and job creation. This has been especially evident in emerging markets over the last 30 years.
However, the growing trend towards de-globalisation in some developed markets (driven by concerns around job losses due to automation and de-industrialisation) is resulting in an increasingly negative reputation for trade. In contrast, the opportunity that trade presents for African markets is potentially game-changing.
Africa is expected to emerge as the second fastest-growing region in the world over the next four years, boasting growth rates between 4% and 5%. As intra-African trade grows, so will development and job creation on the continent. While the value of trade in Africa dipped in 2016 (tracking recent historically low commodity prices) the volume of trade trended upwards. This points to the depth, spread and longevity of Africa’s trade and trade opportunity, beyond just commodities.
According to Vinod Madhavan, Head of Transactional Products and Services for Africa at Standard Bank, as commodities rebound, 2017 is expected to set new records in the volume and value of African trade. He cautions, however, that the point is not to get side-tracked by the current headwinds, which include local currencies losing value, the US dollar remaining scarce in key economies, political risks, and over 10 bank defaults in a number of countries in the near past.
While concerns around operating in Africa are often much higher, this is where banks like Standard Bank play a critical role in reducing the perception that can materially affect people’s lives by diminishing the continent’s ability to trade. As an African bank, we must be clear on how we help our clients manage risk by helping them understand the headwinds in the right context and then deliver solutions that mitigate such headwinds. Beyond managing risk, we work throughout all our markets on the continent to create an environment that allows people in Africa to do business within and between countries.
As we provide our clients with the tools to conduct efficient trade, we also support the evolution of new fintech applications aimed at improving the cost-effectiveness, speed and ease of trade in Africa.
Madhavan expects 2017 to be the year that Africa recognises the huge opportunity available in driving regional and global trade that supports economic development. By 2019, he expects to see an indigenous technology that will support intra-regional trade on the continent, transforming cross-border and global trade, and possibly ensuring that the continent benefits practically from the World Trade Organisation’s recent global treaty to boost global exports by USD1 trillion.