Trade in intermediate goods on the rise in Africa
Trade in intermediate goods (IGs) is playing an increasing role in Africa's economic development. In recent years, IG exports have risen much faster than imports, leading to a significant reduction in the continent's IG trade deficit. Africa’s IG exports (excluding fuels) in 2022 were estimated at US$ 312 billion compared with US$ 196 billion in 2019.
Africa's IG exports are mostly composed of raw or semi-processed materials and primary products supplied at earlier production stages in global value chains (GVCs). They cover a wide range of products, from ores, minerals and precious stones (e.g., iron, rhodium, non-monetary gold and diamonds) and agricultural inputs (e.g., cocoa, coffee and cotton), to manufactured parts, components and accessories (e.g., car wiring kits) used by industries to produce final products.
Africa's IG exports (excluding fuels) in 2022 represented around 77 per cent of total non-fuel merchandise exports from the continent, the highest share in the world.
Evolution of Africa's trade in IGs
Between 2012 and 2019, prior to the COVID-19 pandemic, Africa's IG exports and imports grew at a similar pace, with yearly average growth between 2 and 3 per cent.
Between 2019 and 2022, exports rose much faster than imports, increasing by 16.8 per cent annually. This led to a strong reduction of the IG trade deficit in the region, which reached US$ 11 billion in 2022 — a historical low since 2012 (see Figure 1).
South Africa was partly responsible for this change, as its IG trade surplus reached US$ 32 billion in 2022, compared to US$ 20 billion in 2019. Other factors affecting the reduction of the regional IG trade deficit included rising prices for commodities (see also Figure 3).
Africa's main IG exports
Africa's top 15 IG exports accounted for more than 50 per cent of total IG exports in 2022 (see Figure 2). This is a high level of export concentration compared to other regions in which IG export diversification is greater.
Non-monetary gold was Africa's main exported commodity, accounting for 14.2 per cent of total IG exports in 2022 and mainly originated in Ghana, South Africa and Zimbabwe.
Cocoa beans, both raw and roasted, were the only food item among Africa’s top 15 exports, and were worth more than US$ 6 billion (2.1 per cent of Africa’s IG exports). They are produced essentially in Côte d’Ivoire and Ghana, the two top world producers of cocoa beans.
The impact of commodity prices on Africa's IG exports
The trade value of raw or semi-processed ores, metals and agricultural products is linked to the evolution of prices on global commodity markets (see Figure 3). The marked decline of Africa’s IG exports between 2012 and 2016 was essentially due to a general drop in prices for commodities.
More recently, the strong rise of commodity prices in the wake of the COVID-19 pandemic has largely contributed to the rise in the value of Africa’s IG exports.
This price increase has partly been due to heightened demand for iron ores and rhodium from China’s steel and automotive industries, as well as production shortages in platinum group metals (i.e., palladium, platinum and rhodium) further to power plant outages in South Africa. Platinum group metals are used in metal alloys by many industries to produce catalytic converters and mobile phones, and for other applications in the fields of dentistry or jewellery-making.
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