AfCFTA: A New Era for Global Business and Investment in Africa

WEF (2023) AfCFTA: A New Era for Global Business and Investment in Africa # 38 p.

Global businesses have an important role to play in accelerating the implementation of the AfCFTA. This report outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in successfully entering and expanding in this area.

According to the Forum’s report, agriculture has exceptional potential for increasing intra-African trade, meeting local demand, accelerating GDP growth, creating new jobs and improving inclusivity due to upstream and downstream linkages. It will increase value addition, meet new local demand and bring smallholder farmers — who are responsible for 80% of Africa’s food production — into wider supply chains.

Key sectors 

1. Automotive industry 
2. Agriculture and agro-processing
3. Pharmaceuticals 
4. Transport and logistics

Agro-processing and Africa's agricultural ascension

Opportunities abound in the AfCFTA for new investment in agro-processing, in particular.
Agro-processing has important implications for African food security, job creation and poverty reduction. Boosting it adds value to an already competitive agriculture sector.

Countries across Africa have already increased their focus on agro-processing in response to the food insecurity and price spikes caused by trade disruptions from global shocks — not least the Russian invasion of Ukraine — and because of the potential to transition economies away from the long-established but suboptimal model of exportation of raw materials.

With improved capacity to process their own agricultural goods — whether that’s grain, fertiliser or anything else — African countries can exploit the huge advantage many of them have in their established and sizeable agricultural sectors to build wealth and create new jobs and opportunities at home.

Scaling agro-processing has positive inclusivity impacts, too. Women make up 70% of employment in the overall agricultural sector and most of the domestic agro-processing workforce is female. A boost to African agriculture is a boost for the continent's women.

New investment, new opportunities

This growth in agriculture and agro-processing will drive new investment from abroad, from within the continent and outside of it. The common market introduced under the AfCFTA can leverage regional differences in the strengths and competitiveness of intra-African diversity in their food value chains, specialisations and key outputs.

Increased intra-African trade through the AfCFTA will help reduce dependency on foreign agricultural inputs. Currently, the continent imports about $50 billion worth of agricultural products per year. By 2030, intra-African agricultural trade is projected to increase by 574% if import tariffs are eliminated; a huge victory for a continent historically hobbled by unnecessary reliance on outside economies.

African-owned and run businesses will benefit from this intra-continental trade boost. The fertiliser industry, for example, is expected to boom. New agricultural activity is expected to require an 800% increase in fertiliser application for main nutrients. Irrigation is expected to benefit from $65 million in new investment, while more than $8 billion worth of investment in storage will also be required. All of this, under the AfCFTA, can be fulfilled tariff-free by African enterprises.

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