Regional Integration, Trade, and Investment
Africa is emerging as an attractive investment destination and a key market for goods and services. With a working population of 600 million set to double by 2040, overtaking both China and India, and an improving business environment, Africa is poised to become the world’s next emerging economy. To turn its economic gains into sustainable growth and shared prosperity, Africa's public and private sectors must work together to connect the continent's markets, deepen regional integration, and adopt reforms that enhance competitiveness.
Africa as the New Frontier
- Business friendly policies, increasing urbanization, a growing and better educated workforce, and growing consumer spending are creating opportunities for manufacturing and services industries to grow.
- In recent years, Africa has made great strides in developing its private sector; since 2000, foreign direct investment has increased fivefold, to $50 billion last year, nearly a sixth of which went to top recipient Nigeria.
- While developed countries still dominate African trade, recent trends indicate that developing economic regions are driving the growth in Africa trade and will continue to do so over the next 50 years.
- The share of Intra-African trade remains low compared to intraregional trade in other parts of the world; unlocking Africa’s full economic potential would require economic integration—globally, regionally, and between rural and urban areas.
- Investment in infrastructure for connectivity is important, but policy coordination can also facilitate regional trade.
- For African countries, two inter-related challenges are critical: to diversify the export base, to reduce vulnerability stemming from commodity price swings, and to tighten regional integration.
- African countries are losing out on billions of dollars in potential trade every year because of a fragmented regional market and because crossborder production networks that have spurred economic dynamism in other regions, especially East Asia, have yet to materialize in Africa.