Intra-African trade—the exchange of goods and services between African countries—is increasingly recognized as a vital driver of the continent’s economic growth, resilience, and integration. Although it currently accounts for only about 16 percent of Africa’s total trade as of 2023, this figure is steadily rising, signaling a transformative shift in how African nations engage economically with each other14.
The Promise of Intra-African Trade
Historically, Africa’s trade has been heavily oriented toward external partners, with 84 percent of trade conducted outside the continent, primarily with China, the European Union, and the United States1. This dependence on extra-African markets exposes economies to global shocks and price volatility, limiting their ability to build sustainable growth.
By contrast, boosting trade within Africa offers multiple benefits:
- Economic Growth: According to the IMF, a 5 percentage point increase in trade growth among regional partners correlates with about a 0.5 percent increase in GDP growth for typical sub-Saharan African countries1.
- Diversification and Industrialization: Intra-African trade encourages countries to move beyond raw commodity exports toward manufacturing and value-added products, fostering industrial development4.
- Resilience and Stability: Regional trade reduces vulnerability to external disruptions and strengthens economic independence12.
- Unity and Integration: Expanding trade ties fosters political cooperation and continental unity, supporting Africa’s broader integration agenda.
The Role of the African Continental Free Trade Area (AfCFTA)
A game-changer in this transformation is the African Continental Free Trade Area (AfCFTA), which aims to create a single market for goods and services across 54 countries. Since its launch, the AfCFTA has accelerated intra-African trade growth, with trade between African countries increasing by 12.4 percent in 2024, reaching over US$220 billion2.
The AfCFTA works by reducing tariffs and non-tariff barriers, harmonizing trade regulations, and facilitating easier cross-border transactions. It also promotes the diversification of exports and supports the development of regional value chains.
Key Drivers and Success Stories
- Regional Hubs: Southern Africa leads intra-African trade, contributing over 40 percent of regional trade, followed by West and East Africa1. Countries like South Africa, Nigeria, Egypt, and Côte d’Ivoire are major trade hubs, accounting for a large share of intra-continental commerce.
- Value Addition: Countries such as Rwanda and Tanzania are expanding their exports beyond raw commodities to processed goods like packaged coffee, tea, and sisal fiber, enhancing trade value and competitiveness4.
- Digital Innovations: The Pan-African Payment and Settlement System (PAPSS) is streamlining cross-border payments, reducing reliance on foreign currencies, and increasing transaction efficiency2.
- Trade Fairs and Marketplaces: Events like the Intra-African Trade Fair provide platforms for businesses to connect, explore partnerships, and expand market access8.
Challenges to Overcome
Despite progress, several obstacles slow the full realization of intra-African trade’s potential:
- Infrastructure Deficits: Poor transport networks, limited logistics, and inadequate border facilities hamper trade flow15.
- Trade Barriers: Non-tariff barriers, customs delays, and regulatory inconsistencies increase costs and complexity1.
- Political Instability: Conflicts and political unrest in some regions undermine investor confidence and disrupt trade5.
- Uneven Distribution: Trade activity is concentrated in a few countries, limiting broader regional benefits1.
- Access to Trade Finance: A significant gap in trade finance—estimated at around US$100 billion—restricts the ability of many businesses to engage in cross-border trade2.
The Road Ahead
Experts project a 35 percent increase in intra-African trade by 2045 with full AfCFTA implementation, which could add up to US$450 billion to Africa’s GDP by 203545. Achieving this requires:
- Accelerating AfCFTA implementation and harmonizing policies.
- Investing in infrastructure and digital technologies.
- Enhancing political stability and regional cooperation.
- Expanding access to trade finance and supporting SMEs.
- Promoting value addition and industrial diversification.
Conclusion
Intra-African trade is reshaping the continent’s economic landscape by fostering growth, diversification, and resilience. While challenges remain, the momentum generated by the AfCFTA and regional initiatives signals a new era of African economic integration and opportunity.