The United Nations Conference on Trade and Development (UNCTAD) says urgent infrastructure investments and effective trade policies are needed to unlock the full potential of the African Continental Free Trade Area (AfCFTA), which could create a $3.4 trillion trading market.
“Africa faces serious challenges—from volatile global markets and high debt costs to infrastructure gaps,” said Rebeca Grynspan, Secretary-General of UNCTAD, at the launch of the 2024 Economic Development in Africa Report.
“But these challenges also present an opportunity to reshape the continent’s economic future. With bold reforms, investment, and full implementation of the AfCFTA, Africa can emerge stronger, more resilient, and more competitive.”
The report highlights the critical need to diversify African economies away from over-reliance on commodity exports, which leaves them vulnerable to global shocks.
For example, Mauritius has the highest number of signed and active bilateral investment treaties in sub-Saharan Africa, followed by South Africa and Zimbabwe, each with at least 30.
UNCTAD said bilateral treaties lower investors’ risks by providing guidance on the legal and regulatory climate for business operations.
Key Recommendations
- Boost Intra-African Trade: Reduce trade costs by investing in transport, energy, and ICT infrastructure. Streamline trade policies and processes, such as customs procedures.
- Support Industrialization: Promote industrial development through incentives like tax breaks, affordable loans, and targeted support for SMEs.
- Strengthen Economic Resilience: Establish risk-management mechanisms, including regional funds and early warning systems, to mitigate the impact of global shocks.
- Diversify Export Markets: Reduce dependence on a limited number of trading partners by exploring new markets and promoting intra-African trade.
By implementing these recommendations, Africa can leverage the potential of the AfCFTA, create a more resilient and diversified economy, and drive inclusive growth across the continent.
