This article was prepared with support from the United Nations Economic Commission (ECA) in Africa
At the recent 57th meeting of Africa's finance minister, planning and economic development in Addis Ababa, where the African Continental Free Trade Area (AFCFTA) was an important focus, he said the resilience of the buildings has become more important than ever. Africans need to be inwardly in order to build self-sufficiency. “In particular, against the background of the unstable global economic topography, characterized by rising geopolitical tensions, changing alliances, unfair trade tariffs and attachment of debt crisis,” he said.
By 2045, the AFCFTA is projected to increase in in African trade by 45% and strengthen Africa's GDP by 1.2%. Additionally, production volumes in sectors such as Agri-Food will increase by 60%, industry 48%, services 34%, and energy and mining will increase by 28%. Landlocked countries currently at a disadvantage due to high trade costs and limited access to global markets have “have unique opportunities to free themselves from these geographical disadvantages and boost economic growth.
Gatte also called for strengthening the local value chain and special economic zones.
Africa at a crossroads
His comments were echoed by Hannan Morsey (ECA), Chief Economist and Deputy Director of the UN Economic Commission of Africa (ECA). He said that Africa is not only facing a historic era of opportunity, but also faces both key structural challenges such as low levels of intra-African trade, sustainable infrastructure gaps and limited industrialization.
“The AFCFTA is an opportunity to redefine Africa's economic status, amplify our voice on global issues, and shape the rules of global trade and economic governance.”
Intra-African trade is limited at about 15.8% compared to total trade, significantly less than other regions. But on the contrary, the profile of trade within the continent is more positive than global trade, with 46% higher manufacturing levels of export levels compared to 24% of value-added products (2019-2023), as a percentage of the remaining trade in the world,” she said.
Morcy also highlighted the need for reform of the global financial system to create a more equitable system that will allow multilateral African banks to access funding on more favorable terms.
The discussion also focuses on rescheduling the redistribution of the IMF's special drawing rights (SDRs) as a means to strengthen the capital base of the Multilateral Development Bank (MDB) and to enhance the expansion of concessional loans to African countries.
As Hybrid Capital was approved by the organization's executive committee in 2024, the framework proposed to the IMF to channel these resources was not yet operational, Morsy said.
Promote diversification
Wamkele Mene, executive director of the AFCFTA secretariat, told the Minister's meeting that AFCFTA not only increases trade volumes, but also promotes structural economic diversification.
The Secretariat is implementing private sector engagement strategies in light of the need to move forward and bring out investors and businesses, focusing on four high-power industry segments: agriculture and agriculture processing, automotive, pharmaceuticals, transportation and logistics.
“These sectors were selected based on their strong potential to meet local demand with local production, he said.
In the automotive industry, the secretariat is working with African Bank, the African Automakers Association, and the African Standardization Agency to enhance the manufacturing of local vehicles and components.
“The drug sector is working to advance pooled sourcing mechanisms coordinated by African union agencies to support affordable access to medicines.”
This is supported by intellectual property protocols.
He outlined the operational tools for implementations that have already been introduced. e-Tariff Book is a digitized database that provides accurate customs information for each product and country to importers and exporters.
The other is the Rule of Origin Manual. This is a comprehensive guide to help businesses comply with trade regulations. Already mobilizing $1 billion, the AFCFTA Adjustment Fund was established to address economic disparities.
Pan-Africa Payment and Settlement System (PAPSS) platform allows businesses to trade in local African currency. Previous intakes have been slower than expected, but efforts are underway to accelerate adoption by commercial and central banks.
He said the Guided Trade Initiative (GTI), which aims to test operations, institutions, legal and trade policy environments under the AFCFTA, cites trade with Kenya, South Africa, including manufactured goods such as refrigerators, and shows a move towards more valuable exports.
Rwanda exported packaged coffee to Ghana, while Tanzania exported coffee to Algeria, showing how traditional exports are moving towards value-added products.
Free movement
The high-level event brought complex issues to the fore, such as why African countries appear to have little appetite in protocols regarding the free movement of people and rights of residence and facility.
Antoniopedro, the ECA's Deputy Director (Program Support), said that since the African Union adopted the revised protocol in 2018, only four Africans have ratified the agreement between Rwanda, Mali, Samme, Principe and Niger.
The latest one is Niger, which ratified in 2019. Six years later, nothing more happened. “This is unacceptable,” he said.
Although technically it does not form part of the AFCFTA, its spirit lies directly in line with the free movement of goods and services. “With a compelling, evidence-based analysis, we must dispel the fears that are hindering our performance,” he said he was not afraid to pose a real concern about the meaning of implementing it, as the authorities proposed.
The high cost of travel was also discussed. Adefunke Adeyemi, executive director of the African Civil Aviation Commission, said only 10% of Africans travel on Air.
Representatives have heard that 30% of ticket costs are accounted for by taxes, and that the government sees this as an easy way to raise revenue despite its role as a catalyst for broader economic growth.
The single African air transport market seeking to unify African skies is considered a low-level solution for in-African air travel, potentially reducing airfares by 26%. It came into effect in 2018 and by 2025 38 countries had signed up.
Adeyemi said that 21 member states, which so far account for 85% of the African market, have gradually opened up the sky, with 97 new routes being opened over the past two years. “That's a big deal.”
Increase revenue
The issue of linking between taxes and digital penetration lies under the spotlight, with ECA research showing a strong link between information and communications technology (ICT) and economic growth, even when taxes are raised.
This has resulted in an expanded tax base due to the technology's ability to increase productivity and employment. Research shows that a 10% increase in broadband penetration could result in additional GDP growth of 0.8% to 2.46%.
However, speakers highlighted the fact that despite some progress, Africa remains the least connected continent. This was due to the high cost of ICT and the impact of internet costs on digital access.
