International Trade, Its benefits and challenges in Africa

Economists such as Adam Smith and David Ricardo have written extensively over the years about buying and selling goods and services over national borders, often known as international trade, and how it has been the driving force behind nations' and organizations' economic growth.


Economists such as Adam Smith and David Ricardo have written extensively over the years about buying and selling goods and services over national borders, often known as international trade, and how it has been the driving force behind nations’ and organizations’ economic growth.

As a business owner, it is time to deliberate on how to expand your commercial operations across Africa in order to benefit from and leverage the continent’s economic development and connectivity.

This article will explore what international trade is about, its benefits, its challenges and the cross-border payment solution to help business owners expand across Africa.

What is International trade?

International trade refers to the buying and selling of commodities and services by enterprises from various countries. The international marketplace buys and sells consumer products, raw materials, food, and machinery. It is an exchange involving goods and services between two countries. 

International trade happens when one country has an edge over another in the production of a particular good or service, specifically when the opportunity cost of producing that good or service is lower for that country than for any other. Autarky (self-sufficiency) occurs when a country decides not to trade with other countries.

 If we consider a two country model, both countries can benefit from specialization and commerce. Specialization and trade will enable each country to manufacture the commodity in which it has a competitive advantage, trade it, and eventually consume more of both items. As a result, trade brings benefits.

International trade exists in two forms: import and export


Import & Export

Importing and exporting are basic principles in international trade, functioning as channels for the flow of commodities, services, and ideas between nations, influencing economies and cultures around the world. These techniques are critical to globalization because they allow countries to get access to resources, expand markets, and stimulate economic progress. Importing and exporting are fundamentally about the dynamic exchange of goods and services across borders, with each playing an important role in the complex web of global trade. 


Importing is the process of purchasing goods or services from other countries into the country for sale or consumption. It covers a wide range of things, from raw materials and components to finished goods and high-end items. Importation allows nations to complement domestic output, meet consumer demand, and obtain items that are not readily available inside their borders. Importing allows businesses to have access to cost-effective resources, harness specialized experience, and capitalize on market opportunities beyond national borders.

Customs procedures, tariffs, and regulatory compliance are often used during the importation process to ensure that national laws and international trade agreements are followed.


On the other hand, exporting is the trading and shipment of commodities or services produced locally to international markets. It is an important opportunity for organizations to grow their client base, generate income, and improve global competitiveness. Exporting enables countries to capitalize on their comparative advantages, be it in natural resources, technological innovation, or skilled labor, by tapping into global demand. It promotes economic growth, job creation, and industrial diversity, resulting in increased productivity and innovation within domestic industries. To successfully reach international markets and sustain long-term growth, exporters must navigate legal frameworks, logistical hurdles, and market dynamics, just as they must when importing.

Simply put, exporting is the process of exporting goods and services from one’s native country to another. Importing, on the other hand, refers to the purchase of foreign goods or services and their transport into one’s native nation. 


Importing and exporting are more than just economic transactions; they have a profound impact for global politics, culture, and society. Importing and exporting creates trade links that function as diplomatic conduits, boosting international collaboration and mutual understanding. They encourage cultural exchange by providing people from various backgrounds with access to a vast range of commodities and ideas, improving cultures and broadening viewpoints. Furthermore, importing and exporting help to promote sustainable development by promoting the cross-border transfer of information, technology, and best practices, enabling countries to solve common concerns like climate change, poverty, and public health.


However, importing and exporting have their own set of obstacles and complications that must be carefully navigated. Tariffs, quotas, and regulatory impediments can all stifle economic progress and exacerbate disparities. Furthermore, currency exchange rate changes, geopolitical tensions, and global economic concerns can all cause volatility and risk in international trade interactions, affecting both firms and consumers. Concerns about environmental sustainability, labor rights, and ethical sourcing practices have also prompted calls for greater transparency and accountability in global supply chains, challenging businesses to take more accountable and socially mindful approaches to importing and exporting.

Exporting is the process of exporting goods and services from one’s native country to another. Importing, on the other hand, refers to the purchase of foreign goods or services and their transport into one’s native nation. 


Benefits Trading Globally

1. Increased revenue

One of the primary benefits of international trade for businesses and organizations is the increased number of potential clients. Each country you add to your list has the potential to create new opportunities for business growth and profitability.


2. Reduced competition.

Your products and services may have to compete in a market in Uganda, but you may have less competition in other nations where consumers are less familiar with your offerings.


3. Longer product durability.

Domestic sales of certain products may fall as consumers discontinue or upgrade to newer versions. Selling a product to an international market might extend the life of an old product since growing markets are still in demand for the products.


4. Easy cash flow management

Getting paid beforehand may be one of the unspoken benefits of foreign trading. When trading overseas, negotiating payment terms with vendors may differ. It may be standard procedure to request money in advance, whereas at home, you may have to wait longer for payment. Expanding your firm internationally may help you better manage cash flow.


5. Improve risk management.

Market diversification is a major advantage of international trading. Focusing solely on the home market may put you at greater risk from economic downturns, political crises, natural disasters, and other issues. Being less reliant on a single market may help to offset hazards in your core business.


6. Profiting from currency exchange

Currency swings can help companies that perform international trade. For example, when the British pound falls, you may be able to export more because international consumers benefit from the lower currency conversion rate.

You can also benefit from currency exchange. Assume you do business in the EU, and the euro is strong against the naira. When you exchange payments in euros against a weak Naira, it means more Naira for your Nigerian headquarters. This alone could be one of the most significant benefits of international trade.


7. Access to export funding.

Another benefit of foreign trading is that you may be able to obtain export finance. This is where a company may finance the purchase of capital goods using a sovereign loan agreement, which is then provided to the importer.


8. Dispose of superfluous things

One of the benefits of international trading is that you may have more options for disposing of surplus items that you cannot sell in your domestic market.


9. Enhanced repute.

Success in one country can impact success in other countries, increasing your company’s credibility both domestically and internationally. This is one of the benefits of international trade that might be difficult to quantify and so easily overlooked.


10. Ability to specialize

International markets might provide opportunities for new services and goods to serve those markets. Being exposed to the reality of the world outside your home base may inspire innovations, enhancements, and efficiencies in your current products and services.


Common Challenges of International Trade

1. Distance: Trading across countries can be challenging due to long distances. Buyers and sellers rarely meet, and personal touch is unusual.

There is a significant time gap between placing an order and receiving items from overseas countries. Distance leads to higher transportation costs and dangers.

2. Language diversity: Each country has its own set of spoken and written languages. Price lists and catalogs are created in foreign languages. Advertisements and correspondence will also be done in foreign languages.

A trader who wants to acquire or sell items abroad must either speak the foreign language or hire someone who does.

3. Difficulty with transportation and communication: Dispatching and receiving commodities is time-consuming and costly. During wartime and natural disasters, transportation of products becomes even more difficult. Similarly, the expenses of delivering and receiving information are extremely expensive.

4. Risk in transit: Foreign trade carries significantly higher risk than domestic trade. Goods must be carried over vast distances and are vulnerable to maritime hazards. Many of these hazards can be handled by marine insurance, which raises the cost of commodities.

5. Verifying overseas purchasers’ creditworthiness requires unique processes due to the lack of direct interaction between buyers and sellers. It is difficult to gather reliable information about the financial situation and business standing of overseas traders. Thus, credit risk is considerable.

6. Import and export restrictions: All countries impose customs duties on imports to safeguard their domestic industries. Similarly, tariffs are imposed on raw material exports. Tariff limits apply to both importers and exporters.

They must follow many customs, formalities and rules. Foreign trade policy, procedures, laws, and regulations vary by country and are subject to change over time.

7. Documentation: Both exporters and importers must produce multiple documentation, which requires time and money.

8. Study of international markets: Each market has unique characteristics. It has its own set of requirements, customs, weights and measurements, marketing tactics, and so on. A thorough understanding of foreign markets is vital for success in international trading. It is quite difficult to gather precise and up-to-date information about overseas markets.

9. Market volatility: Anticipating fluctuations in demand and supply abroad can be challenging. Prices in overseas marketplaces may fluctuate often. Changes can occur owing to new competitors, shifting buyer preferences, changes in import duties and freight charges, and currency fluctuations.

10. Payment issues: Each country’s currency and exchange rate fluctuate, posing additional risks.

If you do not employ the proper route, remitting money for payments in foreign trade might take a long time and be quite expensive. This is why you need Yogupay for business, for your international remittance operations.


How Yogupay Facilities International Trade

Streamlined Money Transfers: Yogupay for business allows African enterprises to easily send money to designated recipients, offering a smooth payment process for imports from China and Europe. Plus you can easily make bulk payments easily.

Currency Exchange Services: African businesses can use Yogupay’s currency exchange services to convert their funds into the platform’s many supported currencies. This function aids in the mitigation of currency conversion issues that frequently arise in international commerce operations.

Accessible Web Platform:  Yogupay for business provides a user-friendly web platform that is accessible to African enterprises. Businesses may manage international payments and currency conversions more efficiently with this web interface.

It provides secure and reliable payment disbursement to recipients throughout Africa, with money received through bank transfers or mobile wallet.

Swift Settlement: Is aligned with the value of rapid transactions and ensures that payments reach beneficiaries within 24 to 48 hours, depending on the recipient’s location and country’s banking infrastructure.



International trade is an essential driver for global economic development, providing huge potential for African enterprises looking to expand across Africa. While importation and exportation offers substantial benefits such as market diversity and higher revenue, it also comes with challenges, such as logistical complexities,  legal hurdles and international payment issues. However, with appropriate planning and tools in place, businesses can overcome these challenges and realize the benefits of global trade. Yogupay for business is a payment platform made to simplify cross-border transactions for African businesses. It allows African businesses to traverse international trade with efficiency and confidence by providing secure, efficient money transfers, currency exchange, and a user-friendly platform for its enterprise users. So as a business looking for an easy and efficient way to beat the international payment hurdle, go register and start sending today on Yogupay for business. 

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