Yemisi Izuora
The African Export-Import Bank (Afreximbank), says Africa’s trade landscape remains heavily dominated by export of raw materials, including agricultural products, oil, gas and minerals, while imports continue to be heavily skewed towards manufactured goods and machinery.
The Bank states that the existing export-import configuration leaves many African economies overly exposed to unfavourable terms of trade shock on account of external headwinds, including commodity price volatility, geopolitical tensions and associated global supply chain disruptions.
This is contained in Afreximbank’s Trade and Development Finance Brief, titled “Africa’s Trade and Investment Landscape”, which examines the structural challenges shaping Africa’s trade performance and investment outlook in an increasingly uncertain global environment.
According to the brief, the African Continental Free Trade Area (AfCFTA) remains central to efforts aimed at diversifying the continent’s trade base, strengthening regional value chains and increasing intra-African trade.
The publication notes that, alongside the African Union’s Agenda 2063, the AfCFTA provides a practical framework for integrating fragmented markets, expanding industrial production and boosting productivity, with intra-African exports projected to increase by more than 20 per cent within a decade as implementation advances.
Additionally, the brief further highlights the importance of scaling investment in trade-enabling infrastructure, including energy, transport, communications networks, ports and logistics systems, to reduce the cost of doing business and improve cross-border trade flows. It notes that targeted infrastructure investment can support industrialisation, strengthen regional specialisation, and improve Africa’s competitiveness as an investment destination.
The edition also points to a broader set of priorities for strengthening Africa’s trade and investment ecosystem, including regulatory coherence, institutional strengthening, economic diversification, improved access to finance for small and medium-sized enterprises, and greater use of digital financial technologies.
The Brief notes that domestic and foreign investment are increasing across many African economies, while fintech is contributing to growth in domestic investment, underscoring the opportunity to build a more resilient, diversified and investment-ready trade landscape.
It also notes that domestic and foreign investment are increasing across many African economies, notwithstanding the observed dominance of foreign investment. It further highlights that the direction of investment flows remains uneven across sub-regions, with Eastern and Southern Africa receiving a larger share of foreign direct investment compared to Western and Central Africa.
Afreximbank said the findings reinforce the need for coordinated action to expand trade finance, improve trade-enabling infrastructure, deepen regional integration and accelerate value addition across the continent.
Dr. Yemi Kale, Group Chief Economist and Managing Director, Research says “Regional development finance institutions, including the African Export-Import Bank, are playing an increasing role in supporting intra-African trade through trade finance and related initiatives. The Brief points to Afreximbank initiatives such as the Intra-African Trade Fair, the Pan-African Payment and Settlement System, the AfCFTA Adjustment Fund, the Border Markets Initiative and the Collaborative Transit Guarantee Scheme as part of the wider effort to strengthen Africa’s trade and investment ecosystem.
The report concludes that while progress is being made, significant gaps remain. Addressing these gaps will be essential to increasing financing, strengthening competitiveness and unlocking Africa’s full trade and investment potential.”