Building the economy Africa needs

As geopolitical tensions reshape the world economy, Africa faces a choice: it can allow itself to be carried along by events into an uncertain future or it can use the ongoing shifts in the international order as an opening to position itself as a more influential global player.

In recent years, Africa has shown remarkable resilience in sustaining growth amid external shocks. The African Trade Report 2026 estimates that the continent’s real gross domestic product grew faster than the global average in 2024-25, from 3.4percent to 4.5 percent. But headwinds are gathering. Tariff wars, supply chain disruptions, market volatility and changing alignments are impeding the flow of imports on which African countries, with their limited domestic manufacturing capacity, often depend. These factors are also constraining fiscal revenues from exports, not least by raising transport costs.

For a continent that has traditionally relied on global trade to power development, the vulnerability it now faces can hardly be overstated. And yet, intra-African trade has lately been growing — by 5.5 percent, to about $213.8 billion, last year — supported by deepening regional cooperation and stronger institutions. To secure its future, Africa must build on this progress, creating a stronger, more integrated continental market — and that begins with the implementation of the African Continental Free Trade Area.

To realize the free trade area’s potential, African countries must finalize and implement relevant tariff concessions, complete outstanding rules-of-origin arrangements and incorporate agreements into national customs systems. They should also systematically identify and remove nontariff barriers, simplify customs and border procedures, and improve standards and certification systems to make cross-border trade easier for businesses. Coordination is also essential, both among national agencies — especially those managing trade, customs, finance and industry — and with regional economic bodies.

To secure its future, Africa must build on this progress, creating a stronger, more integrated continental market.
Yemi Kale

At the same time, African countries must invest in industrialization and manufacturing capacity, with a focus on value addition and export diversification. This would strengthen Africa’s position within regional and global value chains and reduce its vulnerability to shocks. Africa has considerable advantages in the form of abundant natural resources and human capital. Now it must harness them to build competitive industries, generate quality jobs for its young, rapidly growing population and enhance the continent’s bargaining power in global forums.

Overcoming persistent trade finance and infrastructure deficits is critical. As long as African businesses cannot secure sufficient financing, their ability to seize opportunities for trade and investment will be limited. That is why the African Export-Import Bank is working toward doubling its intra-African trade finance portfolio to $40 billion this year.

It is an important first step but not nearly enough. Coordinated macroeconomic management and deep financial reforms are also vital to build the kind of dynamic and resilient economies that attract funding. Policy priorities should include aligning infrastructure and industrial policies around major trade corridors, improving trade facilitation, diversifying partnerships and jointly identifying supply chain vulnerabilities and alternative sources of critical inputs.

African governments should also work with the private sector to identify trade and industrial bottlenecks and develop commercially viable solutions. Regional institutions, for their part, should help strengthen and coordinate countries’ responses to external shocks.

Meanwhile, African governments and institutions must continue pushing for reforms to credit rating agencies. Engagement on methodologies, better data collection and measurement and greater transparency are all needed to ensure that ratings more accurately reflect African economies’ fundamentals, potential and default risk. Global investors should also be brought to the table in order to foster a better understanding of African markets and investment risks.

This effort must be matched by broader financial reform. Africa’s trade and industrialization agenda can work only in a progressive, innovative global financial system that is attuned to the continent’s needs and realities. Together, such reforms could go a long way toward increasing long-term investment and inflows of private capital.

Africa cannot control global geopolitics, let alone prevent external shocks. But it can manage its exposure. By building an integrated continental market and investing in higher-value-added production, Africa can position itself not only to weather future volatility but also to play a greater role in shaping global trade. With that, the continent would be well on its way to fulfilling its potential as a global economic powerhouse and a competitive hub of investment, manufacturing, innovation and industry.