IN 2018, when the African Continental Free Trade Area (AfCFTA) was established, the member states set their sights on enhancing economic growth through inclusion and integration. Five years later, this ambitious initiative has not only spearheaded trade in services, investment, and technology but has also led to increased technical sophistication in manufacturing. These developments have created competitiveness and accelerated the pace of digitalisation, ultimately driving productivity.
Against this backdrop of remarkable progress, an upcoming AfCFTA conference scheduled to take place in Cairo from November 9-15 comes at an auspicious moment in Africa’s history. The timing couldn’t be better, as it aligns perfectly with the bright and promising future of trade in Africa. This event serves as a testament to the collaborative efforts of critical stakeholders, including the African Union Commission (AUC), the African Continental Free Trade Area (AfCFTA) Secretariat, and the African Export-Import Bank (Afreximbank). Together, they are diligently working within the framework of AfCFTA to facilitate the exchange of trade and investment information among African nations.
What makes this even more significant is that the trade landscape in Asia, Africa, and the Middle East is undergoing dynamic changes, with annual growth rates expected to outpace the global average. Projections indicate that this anticipated growth will surpass that of Europe and the Americas within the current decade. These three regions collectively account for approximately three-quarters of the world’s population, and they boast some of the planet’s most substantial and rapidly expanding economies. As a result, they are poised to play a pivotal role in shaping a more connected and resilient global trade model.
A recent report by Standard Chartered Bank highlights the shifting tides of global trade, predicting that by 2030, Africa and the Middle East will become central to global business, with an estimated total trade value of $32.6 trillion. Asia, Africa, and the Middle East will anchor global trade, driving $14.4 trillion in exports and $13.4 trillion in imports, with Asia taking the lead.
The report envisions a future where trade in the region is more interconnected and resilient. Landmark agreements like the Regional Comprehensive Economic Partnership (RCEP) and AfCFTA are expected to strengthen intra-regional business and foster greater cooperation among nations in Asia, Africa, and the Middle East. Consequently, employment within these markets is projected to grow at a higher rate than the overall trade growth in the region, with intra-regional exports expected to grow at 5.8 percent and imports at 5.6 percent from 2021 to 2030.
This transformation of supply chains is expected to bring production closer to the point of consumption, enabling businesses to respond more effectively to market changes. The reshaped supply chains will be less susceptible to disruptions, offering more transparency and adherence to environmental, social, and governance (ESG) criteria, fostering a sustainable global trade model.
The report estimates that exports in Africa are expected to exceed $758bn, with imports totalling $842bn. While exports and imports with Europe will remain substantial, they are expected to grow at a slower rate relative to other corridors, such as South Asia, where both exports and imports are projected to nearly double by 2030.
Furthermore, the report highlights the potential for robust growth in two African countries, Nigeria and Kenya. Both countries have ratified the AfCFTA, positioning them to experience significant economic expansion in the coming decade. For Kenya, key initiatives to drive economic growth include the establishment of an intelligent technology hub that stimulates innovation, manufacturing, trade, and digitalisation. Additionally, enhancing SMEs’ digital literacy and global competitiveness through vocational education and training programs is vital. Improving agricultural yield and adapting to climate change using sustainable and adaptive farming practices will drive the country’s economic growth.
Most important are structural policy changes for future trade growth, particularly in areas such as improving infrastructure quality to facilitate trade flows and deepening trade integration by removing tariff and non-tariff barriers. Supportive industrial policies are crucial to boosting manufacturing outputs and exports. Additionally, these policies enable contract enforcement, dispute resolution, foreign investor recourse, and integration of financial markets to facilitate cross-border exchanges and the flow of capital.
The Intra-Africa Trade Fair and the broader trends in trade within Asia, Africa, and the Middle East signal a promising future for these regions. These developments reflect the collective efforts of governments, organisations, and businesses in promoting interconnectedness and resilience in the world of trade. Therefore, strategic policy measures, such as improved infrastructure, trade integration, and supportive industrial policies, are essential to fully realize this potential. The future of global trade is being reshaped, and Africa, Asia, and the Middle East are at the forefront of this transformation.
