Afreximbank’s 2024 African Trade and Economic Outlook shows encouraging intra-African trade growth of 3.2 percent in 2023

“A Resilient Africa: Delivering Growth in a Turbulent World” is the theme of the Afreximbank’s 2024 African Trade and Economic Outlook. The Report provides in-depth analysis of the current global and African macroeconomic environment, trade patterns, and sovereign debt sustainability dynamics, as the basis for trade and economic projections for 2025. Through the examination of historical trends, existing and emerging risks, as well as opportunities, the report seeks to foster a deeper understanding of the factors driving Africa's economic performance and trade patterns, with a view to informing policy design. It also analyses the impact that the implementation of the African Continental Free Trade Area (AfCFTA) and other initiatives critical to accelerating industrialization and promoting sustainable growth across the continent will have on African trade.

First, the report opens with good news. Despite Africa’s trade contracted at 6.3 percent in 2023 and its economic growth decelerated to 3.2 percent in 2023 from 4 percent in 2022, intra-African trade registered a growth of 3.2 percent in the same period, particularly for what concerns intra-African exports, that are calculated in the report separately by intra-African imports. At regional level. Southern Africa recorded the most impressive growth in trade with other countries around the African region, followed by West Africa.

To be noted that already in 2022 there was an 18.6 percent growth of intra-Africa trade, which reached US$193.17 billion, according to the previous edition of the AfreximBank African Trade Report (2023). However, concluding that this increase is due to the AfCFTA would be excessive, considering that preferential AfCFTA trade operations have yet to start, apart from a bunch of test shipments under the guided trade initiative and a few sporadic trade operations under the AfCFTA rules. The potential however is there: Afreximbank estimatesthat assuming that the AfCFTA implementation will continue at the current (accelerated) pace, intra-African trade should see a further expansion already between 2024 and 2026, mainly led by Southern African economies. It is imperative therefore to ensure a successful implementation of the AfCFTA, having in mind that this agreement is not a panacea for all African problems. African States and regional and continental institutions must keep engaging in designing growth-enhancing policies, strengthening institutions and creating business-friendly environments. Last but not least, they must undertake appropriate legal and regulatory reforms to accelerate growth and enhance resilience.

However, this positive scenario also leaves in the background a sense of uncertainty, due to the possibility of new external shocks and geopolitical tensions. These events, the report warns, can have significant knock-on effects on African economic performances, generating a negative shockwave on trade flows and trade costs, as it happened in recent years with the Covid pandemics, the conflicts in Ukraine and Gaza, the Houtis attacks and other similar phenomena. The continent has demonstrated resilience so far, but a lesson that it should be learned is that in an era like the present one, where unpredictable events and human and natural disasters become increasingly frequent, statistics and projections become less reliable, and therefore they must be taken more cautiously than in the past.