Firms Must Drive Africa’s Transformation
With the launch of a new continental trade bloc, Africa is positioned to compete globally and accelerate its economic development. But success will depend on whether national policymakers and African firms can be mobilized to take advantage of the growth opportunities now available.
ADDIS ABABA – The African Continental Free Trade Area, launched at the 12th Extraordinary Summit of African Union Heads of State and Government in July 2019, is the largest multilateral trade agreement since the founding of the World Trade Organization. Comprising one billion people and accounting for over $2 trillion of the continent’s GDP, the AfCFTA promises to sustain the dynamism of Africa’s markets for years to come.
But if the AfCFTA is to fulfill its promise, African firms will need to prepare for a new, more competitive economic landscape. Between 2000 and 2018, the African market grew by 4.6% per year, and domestic demand drove 69% of that growth. But now is the time for the continent to reach its full potential with respect to economic development, job creation, and poverty reduction.
With around 22% of working-age Africans starting new businesses – compared to 19% in Latin America and 13% in Asia – Africa has the highest entrepreneurship rate in the world. But African firms will need to improve their organizational, productive, and technological capabilities. To that end, the upcoming second edition of the African Union’s flagship economic report, Africa’s Development Dynamics, produced in partnership with the OECD Development Centre, offers a three-pronged strategy for both business leaders and policymakers to follow.
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