African Export-Import Bank (Afreximbank) says there is a need to diversify Africa’s trade base, strengthen regional value chains and increase intra-African trade to grow the continent’s economy.
The Bank stated this in key highlights contained in the latest edition of its Trade and Development Finance Brief, titled “Africa’s Trade and Investment Landscape”.
The publication examines extensively the structural challenges shaping Africa’s trade performance and investment outlook in an increasingly uncertain global environment.
Specifically, the current edition highlights the point that 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 existing export-import configuration, the Brief noted, 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.
Consequently, the brief says 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.
Alongside the African Union’s Agenda 2063, the publication notes that 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 percent within a decade as implementation advances.
In addition, 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.
Besides, it notes that targeted infrastructure investment can support industrialisation, strengthen regional specialisation, and improve Africa’s competitiveness as an investment destination.
The edition of the publication 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.
Domestic and foreign investment, it noted, are increasing across many African economies, notwithstanding the observed dominance of foreign investment, adding 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.
The Group Chief Economist and Managing Director, Research of the Bank, Dr. Yemi Kale, said: “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.”
While progress is being made, the Brief pointed out that significant gaps remain, adding that addressing these gaps would be essential to increasing financing, strengthening competitiveness and unlocking Africa’s full trade and investment potential.
