Africa’s Economic Transformation: Unlocking Growth Through Intra-African Trade

March 20, 2025

Government representatives of African countries at the 57th Economic Commission for Africa (ECA) Conference of African Ministers of Finance, Planning, and Economic Development underscored that Africa is at its best opportunity to transform its economy, drive industrialization, and enhance intra-African trade. However, each country’s effort to realize this common ambition still requires urgent and coordinated action.

Intra-African trade has grown by 45 percent, with the continent’s GDP, exports, and imports increasing by 1.2, 7.3, and 6.9 percent, respectively. According to ECA’s Chief Economist, Hanan Morsy, simply easing restrictive regulations could further boost intra-African digital trade by 21.5 percent.

Currently, progress in increasing intra-African trade relative to total trade is limited to about 15.8 percent, substantially less than in other regions. President Taye AtskeSelassie in his opening speech at the conference, also underlined that Africa must move beyond policy ratification and into the full-fledged implementation of its priorities under the AU Agenda 2063.

The potential of a unified market cannot be realized without effective policies that eliminate trade barriers, improve infrastructure, and support value-added manufacturing. He called for National AfCFTA Implementation Committees to strive for robust national strategies while reflecting the need for an institutional framework to ensure the trade agreement’s success.

By the same token, ECA’s Chief Economist Hanan Morsy also highlighted the structural challenges hindering Africa’s economic progress, including slow implementation of the AfCFTA, inadequate infrastructure, low levels of intra-African trade, and limited industrialization. However, she stated that these challenges are not insurmountable if nations take decisive steps toward strengthening regional economic integration.

One of the most pressing issues identified at the conference is Africa’s infrastructure development financial gap, estimated at 170 billion USD annually. Without roads, energy networks, and digital connectivity, the movement of goods, services, and people will remain constrained. Hanan called for innovative financing mechanisms, including public-private partnerships and blended finance, to bridge this gap.

In this regard, Ethiopia’s recent investments in regional logistics, including its corridor connecting with South Sudan and Kenya, exemplify how infrastructure development can facilitate economic integration. Likewise, Ethiopia’s renewable energy exports demonstrate that regional cooperation in energy production can improve industrial growth and enhance trade within Africa, President Taye noted.

On the other hand, Africa has been reliant on exporting raw materials while importing finished goods. This imbalance undermines job creation and economic expansion. President Taye stressed that Africa must transform itself from being a mere exporter of coffee, cocoa, and minerals. By investing in industrial parks, special economic zones, and regional value chains, the continent can create jobs and foster economic resilience, he said.

According to Hanan, Africa’s prosperity now depends on its ability to manufacture and process goods within the continent. Opportunities in the pharmaceuticals, electric mobility, and agribusiness sectors can transform Africa’s economic landscape if properly developed, she indicated.

The future of trade is digital. Investment in digital infrastructure and e-commerce to drive trade efficiency and economic growth is becoming a global trend. Africa’s largest trade protocol—the AfCFTA’s Protocol on Digital Trade—also presents an opportunity to harmonize digital payment systems, remove physical barriers, and ensure that African entrepreneurs can compete on a global stage, according to her.

Zimbabwe Finance Minister Prof. Mthuli Ncube, who also delivered a speech at the opening of the conference, mentioned four basic measures that must be taken to integrate the African economy.

“First, enhancing regional value chains and trade infrastructure is critical. Strengthening production and supply chains in key sectors, including agriculture, manufacturing, and services, will maximize value addition and reduce Africa’s reliance on raw commodity exports.

Secondly, addressing trade barriers and access to finance is essential. Implementing harmonized trade regulations, eliminating non-tariff barriers, and scaling up innovative financing mechanisms like blended finance, thematic bonds, and trade facilitation funds will improve capital access and expand market opportunities for African businesses,” Mthuli noted.

He also underscored the need to leverage digital innovation for trade expansion as a priority and highlighted the importance of strengthening macroeconomic stability and governance to create an enabling environment for trade and investment on the continent.

BY YESUF ENDRIS

THE ETHIOPIAN HERALD THURSDAY 20 MARCH 2025