AFRICA – Guide to the World’s Largest Free Trade Area

When I say “Africa” – what do you think of? Some answer poverty, corruption, war, the developing world. Others answer opportunity, economic growth, emerging markets, the final frontier for business. The reality is that this vast continent of 54 countries (and one self-governing territory!) really boils down to a combination of all of the above. 

Call me biased – I am – Africa is my favourite continent! I tend to spend time hanging out in the latter of those words describing Africa – the more positive outlook on the continent.

Did you know that, according to International Monetary Fund (IMF) data, 6 of the 10 fastest growing economies (real GDP growth) in the world in 2019 are in Africa: Senegal (6.9%); Côte d’Ivoire (7.5%); Ethiopia (7.7%); Rwanda (7.8%); with Ghana and South Sudan being tied for first place (8.8%).

A few other fun facts about the continent:

• Africa is the second most populous continent with around 1.3 billion people – 17% of the world’s population! Africa also has the youngest population in the world with the median age being 19.5 years old according to the United Nations (UN).
• 2 of the 33 megacities in the world are located in Africa today (Lagos and Cairo), and 2 more will be added by 2030 (Dar es Salaam and Luanda). By 2035 it’s estimated that more than half of Africa’s population will live in urban areas.
• Cell phone penetration in Africa is growing at a rapid rate. GSMA estimates that by 2025, over 600 million African’s will be mobile subscribers – that’s about half of the total population! Mobile also helped bring electricity and money to the poorest of the poor in Africa through innovations like M-Pesa and mobile electricity payments.

So now that we know all these great tidbits about Africa, what does this mean for business?

Introducing: The world’s (new!) largest free trade area

The African Continental Free Trade Area (AfCFTA) agreement was unveiled in Kigali, Rwanda in March 2018, and has now been signed by all but one (Eritrea) of the 55 member states of the African Union.

There’s lots to be excited for when thinking of what this deal can bring for the future of Africa. After all, uniting the continent means bringing together 1.3 billion people, a combined GDP of USD $2.5 trillion and the WEF highlights that Africa will be one of the world’s largest single markets, “accounting for $4 trillion in spending and investment across the 54 countries”. 

The first step in moving forward with the agreement is to start by cutting tariffs for good traded within the continent. By removing existing tariff barriers, the IMF estimates that this could increase intra-Africa trade by 15-25% in the medium term.

Now that we have an idea of the impact that this trade deal will have on what’s dubbed as the global economy’s “final frontier”, how do we go about exploring potential business opportunities on the continent?