Transport, Communication and Trade in Africa
Senior 3 · Geography
Transport, Communication and Trade in Africa
Lesson 4 of 5
30 min
Let's begin
At Kimironko Market in Kigali, a trader sells tomatoes from Rwamagana, rice from Bugesera, oranges from Uganda and cooking oil made abroad. A short walk away, Rwanda's tea and coffee are packed for buyers in Europe, Asia and the Middle East. Both are trade, but on very different scales. In 2024 Rwanda's formal imports of goods were worth roughly twice its formal exports (NISR, Formal External Trade in Goods, quarterly reports for 2024). Why do African countries buy so much more than they sell, and what can they do about it?
Definition
Trade: the buying and selling, or exchange, of goods and services. Export: a good or service sold to another country. Import: a good or service bought from another country. Re-export: an imported good sold on to another country without being changed. Barter trade: exchanging goods for goods without money.
Definition
Balance of trade: the value of a country's exports of goods minus the value of its imports of goods. It is a deficit (unfavourable) when imports are larger, and a surplus (favourable) when exports are larger. Balance of payments: the record of all money flowing into and out of a country, including services, aid, loans and money sent home by citizens abroad.
Most African countries export primary products, raw or barely processed: crude oil (Nigeria, Angola, Algeria), minerals (copper from Zambia and DR Congo, gold from Ghana and South Africa), and cash crops (cocoa from Côte d'Ivoire and Ghana, coffee and tea from Ethiopia, Kenya, Uganda and Rwanda). They import manufactured goods: machinery, vehicles, medicines, electronics, fuel and processed food. Rwanda's leading exports include coffee, tea and minerals such as cassiterite (tin ore), coltan and wolframite, and it re-exports fuel, food and vehicles to its neighbours. Because raw materials earn far less than finished goods, many African countries run a trade deficit.
| Problem | Solution |
|---|---|
| Similar products: neighbours grow and sell the same crops, so they have little to sell each other | Diversify production; add value through processing and manufacturing |
| Dependence on a few raw materials whose world prices rise and fall | Process locally (roast coffee, refine metals); develop new exports such as services and tourism |
| Poor transport and communication | Build corridors, railways and border posts; extend mobile and internet networks |
| Tariffs and non-tariff barriers (quotas, roadblocks, slow paperwork) | Remove them through regional blocs and the African Continental Free Trade Area |
| Many different currencies | Regional payment systems; mobile money; plans for common currencies |
| Low incomes, so small markets | Regional integration creates larger markets |
| Political instability and insecurity | Peace-keeping, good governance and dialogue between neighbours |
| Competition from cheap imports and strict quality rules in rich markets | Improve quality and standards (for example through the Rwanda Standards Board); trade agreements that open markets |
| Smuggling and informal trade that escape records | Simpler rules for small traders, such as the EAC simplified trade regime |
Worked example
Worked example 1: balance of trade. A country exports goods worth US$2.4 billion and imports goods worth US$5.1 billion in a year. Find its balance of trade and say whether it is a surplus or a deficit. (Illustrative figures.)
Balance of trade = exports − imports = 2.4 − 5.1 = −2.7 billion US dollars. The value is negative, so it is a deficit of US$2.7 billion. Exports pay for only 2.4 ÷ 5.1 × 100 ≈ 47% of imports; the rest must come from services, aid, loans, investment or money sent home.
Worked example
Worked example 2: why adding value matters. A cooperative sells 1,000 kg of green (raw) coffee at US$5 per kg. If it roasted and packed the coffee, it would sell 800 kg of roasted coffee at US$15 per kg. How much more would it earn? (Illustrative figures.)
Raw: 1,000 × 5 = US$5,000. Roasted: 800 × 15 = US$12,000. Extra = 12,000 − 5,000 = US$7,000, before the cost of roasting and packing. Roasting loses weight, yet the price rises by more, and the jobs stay at home.
Warning
A trade deficit is not the same as a balance of payments deficit. Rwanda earns a great deal from tourism, a service, and receives money from Rwandans abroad. These do not appear in the balance of trade, which counts goods only.
LSE Research: why is African trade under-performing? As you watch, list the barriers to trade that are mentioned and match each to a solution from the table.
Practice
Sources and credits
This lesson adapts CC BY-SA material and is shared under CC BY-SA 4.0.
