Africa stands at a critical juncture in its economic development, with the potential to unlock a $3.4 billion trading market through strategic infrastructure investments and effective trade policies, according to a recent UNCTAD report. The full implementation of the African Continental Free Trade Area (AfCFTA) offers a transformative opportunity to diversify the continent’s economy, which remains heavily reliant on commodity exports and vulnerable to global market fluctuations.
To accelerate this, investments in connectivity, energy, and transport are essential to cut trade costs—50% above the global average—and boost competitiveness, especially for landlocked nations. Small and medium-sized enterprises, which provide 80% of Africa’s employment, need access to credit, risk-management tools, and regional supply chains. Bilateral investment treaties, which lower risks for investors and traders by clarifying legal and regulatory frameworks, play a key role in fostering a stable business environment. Mauritius leads Sub-Saharan Africa with the highest number of signed and active treaties, followed by South Africa and Zimbabwe, each with at least 30 agreements.
However, Africa’s reliance on outdated treaties exposes countries to costly disputes and regulatory constraints. Many also fail to balance investor protection with public interest. The adoption of the Protocol on Investment under the AfCFTA marks a step forward, offering a modern framework that is expected to facilitate intra-African investment. Such initiatives are essential to attract foreign direct investment, which declined by 3% in 2023 amid global economic uncertainty.
Intra-African trade, which accounts for just 16% of total exports, represents one of the continent’s greatest untapped opportunities. To capitalize on this, Africa must streamline trade policies, invest in infrastructure, and incentivize industrialization. Strengthening regional integration will stabilize economies, create new revenue streams, and position the continent as a global economic force.
Source: UNCTAD & Semafor
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