The United Nations (UN) Economic Commission for Africa (ECA) has encouraged African governments to capitalise on the prevailing global economic tensions and fragmentation by fully implementing the African Continental Free Trade Area (AfCFTA).

The AfCFTA aims to create a single market for goods, services, facilitated by movement of persons in order to deepen the economic integration of the African continent, and thus enhance the competitiveness of the economies of State Parties within the continent and the global market.

The AfCFTA is expected to raise Africa's GDP by 1.2% and welfare by 0.9% in 2045.

The ECA’s Economic Report on Africa 2025, released on Monday, examined the AfCFTA and its transformative opportunity to accelerate trade-led integration and drive inclusive, sustainable development.

The report showed that the successful AfCFTA implementation could boost Africa’s trade, inclusive growth, and sustainable development.

However, it said the full AfCFTA implementation requires strategic investment, well-designed policies, and synchronized reforms at national, subregional, and continental levels.

For one, Africa is disproportionately affected by climate change, with annual economic losses at $7 to $15 billion, and projected to rise to $50bn a year by 2030.

The ERA said the AfCFTA can support climate-resilient development through green industrialization and renewable energy investments.

The report also said Africa will need an investment of $120.83bn in transport equipment by 2030 to support the AfCFTA, while also streamlining regulations to enhance market access and foster innovation.

Trade facilitation measures, such as harmonizing customs procedures and reducing non-tariff barriers, are critical for maximizing the benefits of AfCFTA.

The ERA found that intra-African trade was currently dominated by manufacturing, accounting for 46% of exports, followed by food (21%), fuels (20%) and ore and metals (7%).

It said the anticipated 45% increase in intra-African exports by 2045 will boost the value of the continent’s cross-border trade by $275.7bn.

Hanan Morsy, ECA’s deputy executive secretary and chief economist, said AfCFTA implementation can also accelerate Africa’s energy transition, with an estimated $22.4bn of cumulative investments required in electricity generation, transmission, and distribution infrastructure between 2025 and 2040, while about 80% of this will go into renewables.

“With the AfCFTA, we have the potential to boost intra-African trade by 45%. While the benefits will be broadly shared across sectors, agri-business and industry are set to benefit the most,” Morsy said.

“This presents an opportunity to focus on high-value-addition sectors and advance regional value chains.”

Morsy also noted that AfCFTA provided an opportunity to stimulate intra-African trade flows in some sectors where Africa already has a competitive advantage such as fertilizer production.

“Between 2019 and 2023, Africa exported almost $10bn worth of fertilizers outside of the continent annually, while importing $3.7bn worth of fertilizer from other regions. This shows we have huge opportunities to deepen that, even with the existing patterns of production,” she said.

The report also pointed to digitalization as key to Africa's transformation, with digital trade accounting for 25% of global trade in 2020.

However, it noted that Africa lags in internet connectivity, with only 37% of the population connected.

Morsy saud iInvestments in digital infrastructure, such as data centres and internet exchange points, were essential.

She said instant payment systems and building digital inclusivity in Africa has cost and efficiency benefits but many issues still need to be tackled to build trust among consumers.

“Cross-border payment systems can be a game-changer in advancing the AfCFTA. They accelerate the time and reduce the cost of doing a transaction and address perennial foreign exchange constraints,” Morsy said.

“This goes beyond the central bank of one country and to how we can have that oversight at a continental level. We also need to look at digital public infrastructure and see what we need from a cross-border perspective, and how to bring down costs of the internet to improve access.”

Also, the ERA said rapid urbanization presented both opportunities and challenges.

By 2050, 60% of Africa's population will live in urban areas, contributing significantly to GDP but also straining infrastructure and services.

“The AfCFTA offers opportunities for women's economic empowerment, particularly in manufacturing and trade intensive sectors. However, women face major barriers, including limited access to finance, education, and digital skills,” it said.

“Strategic actions—such as promoting science, technology, engineering, and math education for women, enhancing access to finance, and addressing gender-specific challenges in cross-border trade—are needed to ensure inclusive growth.”

BUSINESS REPORT