UN Calls on Africa to Leverage AfCFTA for Economic Resilience Amid Global Shifts

A new report from the United Nations Economic Commission for Africa (ECA) urges African countries to fully implement the African Continental Free Trade Area (AfCFTA) to strengthen economic resilience amid global economic shifts and trade fragmentation.

The Economic Report on Africa 2025, released on Monday, highlights the transformative potential of AfCFTA in boosting intra-African trade, fostering economic growth, and ensuring sustainable development. However, full implementation requires strategic investment, policy reforms, and regional collaboration to maximize its impact.

AfCFTA: A Path to Economic Growth and Stability

AfCFTA aims to create a single market for goods, services, and investment across Africa, enabling economic integration and competitiveness on the global stage. The UN report estimates that successful AfCFTA implementation could increase Africa’s GDP by 1.2% and raise welfare by 0.9% by 2045.

Additionally, the trade agreement is expected to:

• Boost intra-African exports by 45%, adding $275.7 billion to the continent’s trade value.

• Drive green industrialization and climate-resilient development through investments in renewable energy and sustainable manufacturing.

• Require $120.83 billion in transport infrastructure investment by 2030 to enhance connectivity and market access.

With Africa facing economic losses of $7 to $15 billion annually due to climate change, AfCFTA provides an opportunity to invest in sustainable trade and energy solutions.

The Role of Digital Trade and Infrastructure

The report emphasizes digitalization as a key driver of Africa’s economic transformation, highlighting that digital trade accounted for 25% of global trade in 2020. However, Africa lags behind in internet connectivity, with only 37% of the population online.

Key digital trade priorities include:

• Expanding digital infrastructure, such as data centers and internet exchange points.

• Strengthening cross-border payment systems to lower transaction costs and ease currency constraints.

• Enhancing digital inclusivity by improving internet affordability and accessibility.

“Cross-border payment systems can be a game-changer in advancing the AfCFTA,” said Hanan Morsy, ECA’s deputy executive secretary and chief economist.

Urbanization, Gender Equality, and Economic Inclusion

By 2050, 60% of Africa’s population will live in urban areas, creating both economic opportunities and infrastructure challenges. AfCFTA can support smart urban development and industrial growth if backed by the right policies.

The report also highlights women’s economic empowerment as crucial for inclusive growth, particularly in manufacturing and trade-intensive sectors. Women face barriers such as limited access to finance, education, and digital skills, which must be addressed through:

• STEM education programs for women to increase participation in high-value industries.

• Improved financial access to support female entrepreneurs in trade.

• Gender-sensitive trade policies to remove barriers in cross-border commerce.

Africa’s Path Forward

The UN stresses that AfCFTA is Africa’s best opportunity to build a more resilient, self-sustaining economy in the face of global economic uncertainties. However, achieving its full potential requires:

• Harmonizing trade regulations across African nations.

• Investing in infrastructure to improve supply chain efficiency.

• Strengthening digital connectivity and payment systems to facilitate trade.

“With the AfCFTA, we have the potential to boost intra-African trade by 45%. The benefits will be widely shared across agriculture, industry, and services,” Morsy noted.

As Africa navigates the new economic landscape, leveraging AfCFTA’s full potential will be key to long-term prosperity and stability.

{Source IOL}

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