.Says AfCFTA has potential to further boost exports by 30 per cent
Standard Chartered has today published its Future of Trade: Africa report, highlighting the outlook for African trade and providing a view of the African
Continental Free Trade Area (AfCFTA) as a key proponent of optimising intra-African trade.
The report finds that Africa’s total exports will reach USD952 billion by 2035 and the AfCFTA,
once fully implemented, has the potential to increase this figure by a further 29 per cent. This
represents an annual growth rate of 3 per cent from now until 2035.
Rising regional trade levels and greater connectivity will unlock high‑growth corridors across
Africa and beyond. Intra-Africa trade is expected to reach USD140bn by 2035, equating to 15 per
cent of Africa’s total exports.
Africa’s corridors with some of the world’s most dynamic regions will grow faster than the global
average of 4.3 per cent. The East Africa-South Asia corridor is expected to emerge as the fastest-
growing major corridor, at 7.1 per cent per annum through to 2035. The Middle East-North Africa
and the Middle East-East Africa corridors will also be substantial, with their combined trade
volume expected to reach almost USD200 billion by 2035.
The AfCFTA is not the first attempt made by Africa’s markets to promote greater cohesion, but the
existing agreements often have overlapping or contradicting objectives – creating a “spaghetti
bowl effect”. There are eight significant Regional Economic Communities (RECs) recognised by
the African Union (AU), and most AU markets are enrolled in two or more RECs, with the high
costs of compliance and administration making intra-Africa trade less competitive. AfCFTA could
help overcome this by implementing common rules of origin, which grant all 54 AfCFTA members
preferential trade access to each other’s markets, to the extent set out in the agreement.
Africa however still has barriers to overcome to realise the full potential of its trade opportunity.
Based on a survey conducted with over 100 of Africa’s business leaders, 63 per cent polled said
complex and uncertain trade rules are one of the top challenges of intra-African trade. 53 per cent
of respondents noted that underdeveloped transportation infrastructure is a key barrier. 51 per
cent cited ineffective trade facilitators as another hurdle, whilst 46 per cent noted that limited
and/or costly access to capital is a challenge.
Around 90 per cent of respondents believe the AfCFTA can address most of these issues.
Progress has been made in this regard, with the AfCFTA taking steps to address barriers through
various initiatives, such as a reporting mechanism and a guided trade initiative to accelerate
trading 1 amongst countries.
Digitalisation also plays an important role in bolstering intra-Africa trade. The report demonstrates
that adopting digital supply chain financing (SCF) solutions could unlock USD34 billion of export
value in five key African markets by 2035. Almost all (97 per cent) of respondents are interested in
digital SCF solutions but cited resource constraints, a technology gap and interoperability
challenges as key barriers to adoption.
Dr José Viñals, Group Chairman of Standard Chartered PLC, said: “Implemented effectively,
the African Continental Free Trade Area can radically reshape future growth and development. It
will enable higher value-add supply chains and more diversified exports, allowing member states
to reduce historical commodity dependence and achieve meaningful progress towards multiple
Sustainable Development Goals. Through our global footprint, local expertise and innovative
solutions, we are committed to supporting the development of the right policies, securing
cooperation, and applying technology and capital in order to build better connections within the
continent, and beyond.”
Sunil Kaushal, Regional CEO, Standard Chartered Africa Middle East, said: “The disruptions
to Africa’s supply chains over the last few years have amplified the urgency to implement the
AfCFTA. At the same time, the findings of our report outline the requirements to exponentially
bolster Africa’s exports, which the AfCFTA would benefit greatly. With the right regulations,
collaboration, and governance, this opportunity can be made a reality. For over 150 years,
Standard Chartered has supported Africa's growth and progress, actively contributing to the
continent's infrastructure development and economic advancement. We will continue to work with
the relevant stakeholders in driving trade throughout the continent and ensuring Africa’s
sustainable economic development.”
