Pakistan seeks trade ties with Africa, what is it offering?

The second edition of the Pakistan-Africa Trade Development Conference and Single Country Exhibition aimed to form partnerships with Nigerian companies took place in Lagos between November 23-25. But it is not what such A partnership offers Africa.

Pakistan, a country of 220 million people is struggling with erratic growth, racked with debt and bogged down by runway inflation. Its politics is unstable, its currency, the Pakistan Rupee has lost over 10 percent of its value within the last six months. As of October, Pakistan’s foreign exchange reserves fell to $17.3bn from $19.2bn.

Two days to the commencement of the Lagos event, the country’s government said that it had reached an agreement with the International Monetary Fund for the first $1 billion of what is expected to be a $6 billion rescue package.

Yet, the Trade Development Authority of Pakistan and Ministry of Commerce are organising the 2nd Pakistan Africa Trade Development Conference in Lagos, from 23-25 November 2021 under the Look Africa Policy Initiative of Government of Pakistan.

The previous edition held in Nairobi last year which was targeted at making incursions into East and Central Africa. The Lagos edition is targeting businesses and government officials from more than 15 countries of the Economic Community of West African States (ECOWAS) to foster business interaction and linkages with Pakistani exporters and government officials.

According to the Karachi Chamber of Commerce, the overarching goal is to get a foothold in the African markets. But what is Africa really getting in return?

African market promise

It is easy to see why Pakistan will take a keen interest in Africa. It recently launched the long-planned Africa Free Continental Trade Area (AFCFTA) pact which aims to integrate, diversify and industrialise the economy of about 1.3 billion people with a combined gross domestic product of $3.4 trillion.

African countries have a poor history of trading with one another and the new pact which commenced in January 2021 is meant to address this. The Agreement is expected to create a Continental Free Trade Area (CFTA) for goods and services, liberalise and facilitate the free movement of people, investments and businesses across the continent.

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But progress has stalled. Adeniyi Adebayo, Nigeria’s Minister of Industry, Trade and Investment at the intra-African Trade conference in Durban South Africa said that the negotiations on the rules of origin which is stalling the take-off of the trade deal are 87 per cent completed.

The rule of origin, a criterion where participating countries must source their products locally is still a wrinkle in the negotiations. There is also a provision to guide against trans-shipment of products outside the African market and preventing dumping goods in a country, issues around this are yet to be fully resolved.

Pakistan’s Look Africa policy wants to leverage the gaps in intra-African trade. Pakistan’s trade with Africa was $4.18 billion for 2019-20 according to data from the country’s Commerce. A development blames on the low level of engagement with Africa.

The ‘Look Africa Plan’ seeks to change that. Under the plan, Pakistan is seeking to negotiate preferential trade agreements with three African trading blocs, the government said.

These blocs include the Southern African Customs Union (SACU) comprising Botswana, Lesotho, Namibia, South Africa and Swaziland; East African Community (EAC) comprising Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda; and Economic Community of West African States (ECOWAS) which consists of Benin, Burkina Faso, Cabo Verde, Cote d’Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togolese.

Under this policy, African countries prioritised for trade promotion are; Nigeria, Kenya, South Africa, Morocco, Senegal, Algeria, Egypt, Sudan, Tanzania, and Ethiopia being top ten Economies of Africa. These ten countries account for about 80 percent of the continent’s total GDP.

Pakistan trade with Nigeria

Nigeria does not do much trade with Pakistan. Nigerian Exports to Pakistan was a paltry $108.49 million in 2020, according to the United Nations COMTRADE database on international trade.

Pakistan’s major trading partners are not on the African continent.

The bulk of the country’s foreign trade consist of mineral fuels, oils, distillation products, electrical, electronic equipment, machinery, nuclear reactors, boilers, iron and steel, animal, vegetable fats and oils, cleavage products and plastics. With the exception of oil and agricultural products, Africa does not have a comparative advantage in the production of these goods.

Meanwhile Pakistan is forging a massive alliance with China under the China Pakistan Economic Corridor (CPEC) which is set to pour in over $46 billion worth of investment into the country by 2030.

Under the initiative, China’s investment in energy, transport, fibre optics and the Gwadar port will form part of a 3,000 km corridor the Asian superpower is building cut transportation time of oil and goods from the Middle East from 12 days to 36 hours.

It is logical to expect that these investments into Pakistan could revitalise its economy while providing a strategic trade route from China to Africa. Could this handshake across the Sahara be a gambit to find a path into Africa’s growing market?

More than 113 leading Pakistani companies were registered to participate in the Lagos exhibition from textiles, cosmetics, leather, food, pharmaceuticals, tractors, electrical appliances, fans, cable, steel, surgical, paint, chemicals, IT, sports etc.

While Pakistan does not have much to offer Africa right now, it is nevertheless betting that Africa could provide an important market in future. The imperative for African economies now is coming up with a strategy to leverage this growing enthusiasm for the continent.

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