The Economic Report on Africa 2025 is out, offering an in-depth analysis of Africa’s economic trajectory and the pivotal role of the African Continental Free Trade Area (AfCFTA) in shaping the continent’s future. The report highlights the progress made in AfCFTA’s implementation, the challenges encountered, and the transformative potential of trade-led integration. As Africa navigates post-pandemic recovery, the report emphasizes the need for strategic investments, coordinated policies, and structural reforms to unlock AfCFTA’s full potential.
With a youthful population, abundant natural resources, and expanding consumer markets, Africa has immense opportunities for economic growth. However, despite a rebound from the COVID-19 pandemic, growth rates remain below pre-pandemic levels, slowing progress toward the Sustainable Development Goals (SDGs). The Economic Report on Africa 2025 provides a roadmap for leveraging AfCFTA to drive industrialization, economic diversification, and sustainable development.
Progress in AfCFTA implementation
Significant strides have been made in implementing AfCFTA. A major milestone was the launch of the Guided Trade Initiative (GTI) in October 2022, which facilitated the first transactions under the agreement. Initially, seven countries—Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, and Tanzania—plus Tunisia participated, trading a select range of products such as ceramic tiles, batteries, tea, coffee, processed meat products, corn starch, sugar, pasta, glucose syrup, dried fruits, and sisal fiber. The initiative has now expanded to over 30 countries, including Africa’s two largest economies, Nigeria and South Africa.
The GTI experience has provided several key takeaways:
- Institutional frameworks are critical – Governments must establish structures to support AfCFTA implementation at the national level.
- Greater awareness of trade rules is needed – Many businesses assumed that AfCFTA’s preferential trade regime meant zero tariffs immediately, leading to confusion.
- Transportation and logistics are essential – Trade efficiency depends on well-functioning ports, roads, and customs procedures.
- Diplomatic commercial presence enhances trade – Strengthening economic diplomacy fosters stronger trade relations.
AfCFTA’s trade liberalization schedule
AfCFTA’s trade liberalization follows a phased approach to ensure smooth transition for both Least Developed Countries (LDCs) and Non-LDCs:
Table 2.1: Schedule of Liberalization of Trade in Goods under AfCFTA
| Products/Countries | Least Developed Countries (LDCs) | Non-Least Developed Countries (Non-LDCs) |
|---|---|---|
| Full Liberalization | 90% of tariff lines (10 years) | 90% of tariff lines (5 years) |
| Sensitive Products | 7% of tariff lines (13 years) | 7% of tariff lines (10 years) |
| Excluded Products | 3% of tariff lines | 3% of tariff lines |
This schedule ensures a gradual reduction in trade barriers, allowing countries at different development stages to adjust accordingly.
AfCFTA’s economic potential and challenges
If fully implemented, AfCFTA could increase intra-African trade by 40%, reducing dependence on external markets. By promoting regional value chains, the agreement enables African countries to shift from exporting raw materials to producing value-added goods such as processed foods, textiles, and automotive components.
However, several challenges must be addressed:
- Infrastructure gaps – Poor roads, unreliable energy supply, and inefficient ports hinder seamless trade.
- Regulatory misalignment – Varying trade policies across countries create bottlenecks.
- Limited digital trade frameworks – Digital commerce remains underutilized due to fragmented regulations.
- Environmental concerns – While intra-African trade is projected to grow 35% by 2045, emissions will rise by less than 1%, necessitating sustainable trade policies.
Strategic actions for AfCFTA’s success
To maximize AfCFTA’s impact, the Economic Report on Africa 2025 recommends:
- Investing in Infrastructure: Upgrading roads, railways, and energy networks to reduce trade costs.
- Strengthening Policy Coordination: Harmonizing trade rules to facilitate smoother cross-border transactions.
- Building Business Awareness: Educating exporters and importers on AfCFTA’s trade benefits.
- Expanding Digital Trade: Standardizing e-commerce regulations to boost online trade and financial transactions.
AfCFTA is a blueprint for Africa’s economic transformation. By fostering industrialization, deepening regional integration, and enhancing economic resilience, AfCFTA aligns with Agenda 2063: The Africa We Want. However, its success depends on strong political will, strategic investments, and sustained collaboration among governments, businesses, and regional institutions.
The Economic Report on Africa 2025 serves as a guiding document, outlining actionable steps to accelerate AfCFTA’s implementation. With the right policies in place, Africa is well-positioned to emerge as a global trade hub, where intra-African commerce fuels prosperity, job creation, and long-term sustainable development.
