African Export-Import Bank (Afreximbank) has published the latest edition of its Trade and Development Finance Brief, highlighting the structural challenges affecting Africa’s trade performance and investment setting amid growing global economic uncertainty.
The document notes that domestic and foreign investment are increasing across many African economies, although foreign investment continues to account for the largest share of capital flows. Investment patterns also remain uneven, with Eastern and Southern Africa attracting a greater proportion of foreign direct investment than Western and Central Africa.
According to the report, this trade structure leaves many African economies vulnerable to commodity price volatility, geopolitical tensions and disruptions to global supply chains. 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, according to Dr. Yemi Kale, Group Chief Economist and Managing Director, Research at Afreximbank.
Building the Foundation for Growth
The report identifies the African Continental Free Trade Area (AfCFTA) as a key mechanism for diversifying Africa’s trade base, strengthening regional value chains and increasing intra-African trade. Together with the African Union’s Agenda 2063, the AfCFTA is expected to support market integration, industrialisation and productivity growth across the continent.
Related: Sierra Leone firms get investment boost
Afreximbank noted that intra-African exports could rise by more than 20% over the next decade as implementation of the trade agreement progresses.
The publication points to regulatory reform, stronger institutions, economic diversification, greater access to finance for small and medium-sized enterprises, and the adoption of digital financial technologies as priorities for improving the continent’s trade and investment ecosystem. It also highlights the importance of increasing investment in trade-enabling infrastructure, including energy systems, transport networks, ports, logistics facilities and communications infrastructure.
Such investments are viewed as critical to reducing the cost of doing business, improving cross-border trade flows and enhancing Africa’s competitiveness as an investment destination.
For the average business owner trying to move goods across borders, the difference between a stalled shipment and a successful delivery often comes down to the reliability of the road or port they use. When the physical links between markets are weak, even the best trade deals in the world struggle to move forward, which makes the push for better infrastructure less of a theoretical goal and more of a practical necessity for survival.
Related: BII and Africa50 Join to Fund African Infrastructure
Initiatives to Drive Integration
The report highlights several Afreximbank initiatives designed to support trade and investment, including 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.
The publication concludes that while progress is being made in strengthening Africa’s trade and investment environment, significant gaps remain. Addressing these challenges, the report says, will be essential to increasing financing, improving competitiveness and unlocking the continent’s long-term trade and investment potential.
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, according to Dr. Yemi Kale, Group Chief Economist and Managing Director, Research at Afreximbank.
