Intra-Africa trade has long held untapped potential for the continent’s economic growth and resilience. As African countries strive for economic diversification, reducing dependency on raw material exports and fostering industrialisation remains a key objective. While traditionally focused on commodity exports, many African economies are now seeking to rethink their trade and investment patterns, moving toward value-added production and intra-regional trade that could unlock significant economic opportunity. However, realising this vision demands a renewed focus on the structural reforms and infrastructural investments necessary to integrate markets and create diverse and inclusive growth.
The Promise of AfCFTA
The establishment of the African Continental Free Trade Area (AfCFTA) in 2021 represents a milestone for the continent, creating the largest free trade area in the world by country count. With 54 out of 55 African Union members signing the agreement, AfCFTA aims to create a single market with over 1.3 billion people and a combined GDP of USD 3.4 trillion. It seeks to reduce tariffs on 90 percent of goods, promote service trade, and stimulate investments across member states.
According to the United Nations Economic Commission for Africa, if implemented effectively, AfCFTA could boost intra-Africa trade by 52 percent by 2025. Beyond trade expansion, the agreement promises to accelerate economic diversification and industrialisation. Key sectors such as agriculture, manufacturing, and services could see significant gains, with value-added production becoming more central to the continent’s economic landscape.
Economic Diversification: A Pathway to Resilience
One of the primary benefits of expanding intra-Africa trade is the potential for diversification and inclusion which will see MSMEs gain significantly.
“Traditionally, many African economies have relied on exporting raw materials, such as oil in Nigeria and copper in Zambia. The volatility of global commodity markets has exposed vulnerabilities in this approach. Developing diversified economies would mitigate these risks, as industries such as technology, agriculture, textiles, and tourism gain prominence,” observes, Mark Mordi SAN, Partner, Aluko & Oyebode (ALN firm in Nigeria).
Furthermore, AfCFTA’s focus on tariff reductions for specific goods and services can help small and medium-sized enterprises (SMEs) enter larger markets. According to the World Bank, AfCFTA could lift 30 million people out of poverty and increase the income of 68 million Africans. By enabling regional value chains, African countries can increase their competitiveness, meet a growing demand for goods within Africa and reduce the continent’s dependency on imports from outside the continent.
Infrastructure and Connectivity: Bridging the Gaps
While AfCFTA is a promising framework, significant barriers remain. Infrastructural deficits across the continent present major obstacles to achieving seamless trade flows and integration. According to the African Development Bank, the continent should bridge an annual infrastructure financing gap of USD 68–108 billion.
“A critical catalyst for promoting intra-Africa trade is enhanced infrastructure and connectivity. Improved transportation networks, such as railroads, highways, and ports, are crucial for facilitating the efficient movement of goods. Logistics challenges, such as complex customs procedures and inadequate storage facilities, also raise costs, slowing trade and reducing competitiveness,” remarks, Luisa Cetina, Director, Anjarwalla & Khanna (ALN firm in Kenya)
Digital infrastructure is equally critical. Africa’s uptake in digital adoption can enhance digital connectivity and streamline trade processes, making cross-border trade more efficient and inclusive. In recent years, countries such as Rwanda and Kenya have become regional leaders in digital innovation, leveraging technology for public service delivery and business operations. Digital payment systems, for example, can enhance transparency and reliability, essential for building trust in trade relationships and expanding financial inclusion.
Harmonising Regulatory Frameworks and Policies
A key barrier to intra-Africa trade has been the diversity of regulatory frameworks, standards, and customs procedures across countries. Different regulatory environments increase compliance costs and cause delays, discouraging cross-border trade. Harmonising these frameworks is essential for creating an environment conducive to trade and investment.
Efforts are underway to address this issue. Regional economic communities such as the East African Community (EAC), Economic Community of West African States (ECOWAS), and Southern African Development Community (SADC) have made strides in creating standardised trade procedures within their regions. However, aligning these regional standards with AfCFTA’s overarching framework is necessary to ensure seamless trade across all African borders. Streamlined regulations would particularly benefit SMEs, which often lack the resources to navigate complex trade requirements.
Promoting Inclusive Growth through Trade
Inclusive growth is central to the vision of AfCFTA. Women and youth account for a significant portion of Africa’s population, yet they face considerable challenges in accessing the resources needed to participate in trade. Women own about one-third of Africa’s small businesses but often struggle with limited access to finance, information, and networks. Supporting women-led enterprises, particularly agriculture and manufacturing, could drive inclusive growth and deepen economic diversification.
Similarly, Africa’s youth population—expected to reach over 830 million by 2050—holds enormous potential for transforming the continent’s economic landscape. By prioritising skills development and investment in sectors such as technology, manufacturing, and agriculture, African nations can harness the energy and creativity of their young populations. Initiatives aimed at providing training and access to resources for young entrepreneurs will be instrumental in creating a sustainable ecosystem for inclusive trade.
Unlocking Africa’s Potential on the Global Stage
As Africa moves toward greater economic integration, its position in the global economy could be transformed. By diversifying its economy and fostering intra-Africa trade, the continent would be better positioned to negotiate favourable trade terms with global partners.
“African countries could leverage their collective bargaining power to secure deals prioritising local industry development, protect African businesses, and drive investment into infrastructure, health, education and further into sports, arts and culture,” notes, Italo Morelli, Partner, Musa Dudhia & Co., (ALN firm in Zambia).
The African Union’s Agenda 2063 envisions a prosperous, peaceful, and integrated Africa, driven by its citizens. AfCFTA is a step in that direction and its success will depend on the commitment of African governments, businesses, and international partners to overcome existing barriers and invest in the continent’s future.
Conclusion
Transforming intra-Africa trade is essential to building resilient, inclusive, and diversified economies across the continent. While the path to greater integration faces numerous challenges, the economic and social benefits are undeniable. With strong commitment and strategic investment, African countries can unlock the potential of intra-continental trade to create sustainable growth, improve livelihoods, and redefine Africa’s role in the global economy. Through the AfCFTA and a collective focus on overcoming obstacles, Africa can take a decisive step toward a prosperous, interconnected future.
Sources
Brookings Institute | Economist Impact | United Nations | United Nations Economic Commission for Africa | World Economic Forum
