Accelerating Africa’s path to a $10 trillion economy: Strategic exploration of AfCFTA

Africa is poised for transformative economic growth, with the African Continental Free Trade Area (AfCFTA) offering unprecedented opportunities to propel the continent toward becoming a $10 trillion economy. By strategically leveraging AfCFTA’s potential, African nations can create a unified market, attract investments, foster innovation, and increase competitiveness on the global stage.

The AfCFTA: A catalyst for economic integration

Launched in 2019, AfCFTA is the largest free trade area in the world by the number of participating countries, uniting 54 nations with a combined GDP of $3.4 trillion. Its goal is to eliminate tariffs on 90 percent of goods, reduce non-tariff barriers, and create a single market for goods and services across Africa.

The strategic exploration of this agreement has the potential to address the continent’s fragmented markets, boost intra-African trade (currently at only 15 percent compared to 60 percent in Europe), and create a more competitive and self-reliant economic ecosystem.

Key drivers to achieve a $10 trillion economy

1. Boosting intra-African trade:

AfCFTA can significantly increase trade within the continent by eliminating barriers such as tariffs, complex customs processes, and poor infrastructure. According to the World Bank, the agreement could raise intra-African trade by over 50 percent by 2030, generating $450 billion in income and lifting 30 million people out of extreme poverty.

2. Industrialisation and value addition:

Africa’s reliance on raw material exports leaves it vulnerable to global price fluctuations. AfCFTA can encourage industrialisation and the establishment of regional value chains where countries specialise in different stages of production. For example, East Africa could focus on textile manufacturing while West Africa could lead to agro-processing.

3. Attracting investments:

A unified African market of 1.4 billion consumers presents a lucrative opportunity for global and regional investors. Strategic investment in manufacturing, agriculture, energy, and technology can create jobs and spur economic growth. AfCFTA also makes Africa a more attractive foreign direct investment (FDI) destination by reducing market fragmentation.

4. Harnessing Africa’s digital economy:

Digital trade and e-commerce are vital to Africa’s economic transformation. The agreement’s framework includes provisions to boost technological, logistics, and digital payment systems innovation. This can empower small and medium enterprises (SMEs) to access new markets and expand their operations.

5. Infrastructure development:

To maximise the benefits of AfCFTA, Africa must address its infrastructure deficit, which costs the continent over $170 billion annually in lost productivity. Strategic investments in transportation, energy, and communication networks can improve connectivity and reduce logistics costs, enhancing trade competitiveness.

6. Youth and human capital development:

With a median age of 19, Africa has the world’s youngest population. Investing in education, skill development, and entrepreneurship will enable the youth to drive innovation, productivity, and economic growth. AfCFTA provides a framework for regional cooperation in these areas.

Challenges and mitigation strategies

While AfCFTA offers immense potential, challenges such as uneven economic development, regulatory disparities, and political instability must be addressed.

• Regulatory harmonisation: Governments must standardise trade policies, quality standards, and customs procedures to ensure smooth trade flows.

• Capacity building: Technical and financial support from institutions like the African Development Bank (AfDB) can help weaker economies participate fully in the agreement.

• Political will and cooperation: African leaders must prioritise regional integration over national interests to realise the collective benefits of AfCFTA.

The path to a $10 trillion economy

To accelerate Africa’s journey to a $10 trillion economy, AfCFTA must be explored strategically as a foundation for sustainable growth. Policymakers, private sector players, and development partners must collaborate to create an enabling environment for trade, innovation, and investment.

In addition to economic benefits, AfCFTA can foster social and political cohesion, reduce conflicts, and promote shared prosperity. By embracing its full potential, Africa can unlock unprecedented economic opportunities, become a global powerhouse, and improve the quality of life for its people.

AfCFTA represents a historic opportunity for Africa to achieve economic integration and unleash its potential as a $10 trillion economy. Strategic exploration of its benefits—through increased trade, industrialisation, investment, and innovation—can transform the continent into a global economic leader. With collective effort and vision, Africa can turn this aspiration into reality, setting a new benchmark for inclusive and sustainable development.

Prof Lere Baale is the CEO of Business School Netherlands International in Nigeria and a Strategy Consultant for CMOE-Middle East and African Region (MEAR).