The Key to Unlocking Africa’s Economic Potential
Fostering intra-African integration and removing trade barriers will be critical to Africa's coming economic transformation. Two agreements, in particular, promise to lower production costs, create new value chains, boost domestic demand, and attract global investment.
WASHINGTON, DC – Africa is on the cusp of an economic transformation. By 2050, consumer and business spending on the continent is expected to reach roughly $16.1 trillion. The coming boom offers tremendous opportunities for global businesses – especially US companies looking for new markets. But unless African policymakers remove existing barriers to regional trade and investment, the continent’s economy will struggle to reach its true potential.
Two major trade agreements – the African Growth and Opportunity Act (AGOA) and the African Continental Free Trade Area (AfCFTA) – will make it easier for African countries to trade with one another, and with the United States. Together, the agreements promise to remove longstanding impediments to industrialization.
AGOA, passed by the US Congress in 2000, gives countries in Sub-Saharan Africa preferential trade access, allowing them to export tariff-free products to the US. Although it will expire in 2025, US President Joe Biden’s Sub-Saharan Africa strategy, unveiled in August, highlights its positive impact and promises to work with Congress on ways to proceed after AGOA lapses.