By now, most of us have heard the African continent being labelled as “the next frontier” – perhaps more times than we can count. This repetition notwithstanding, the truth that lies behind this phrase is that the African continent promises significant growth and development opportunities – at the same time that trade will be bolstered by government commitment in the form of the African Continental Free Trade Area (AfCFTA) agreement.
I have previously written in this very forum about the benefits of the AfCFTA for exporters. Signed by the heads of 54 African countries, the AfCFTA agreement lays the foundation in which many industries are building their African aspirations. The World Economic Forum, in its report “AfCFTA: A New Era for Global Business and Investment in Africa”, highlights that the AfCFTA creates a single market projected to grow to 1,7 billion people and $6.7 trillion in consumer and business spending by 2030 – only six years from now.
Moreover, the World Bank projects that the AfCFTA could “lift 50 million people out of poverty, raise overall incomes by 8%, increase intra-African exports by up to 109%, and increase international exports by 32% by 2035”. To go into specific examples, a high-yield industry such as automotive manufacturing is expected to grow to more than $42 billion by 2027, while intra-African trade in agriculture is expected to increase by 574% by 2030 (provided import tariffs are eliminated under the agreement).
With this kind of advancement, who could doubt the potential of Africa?
That being said, potential needs the right circumstances and support in order to be realised. The World Economic Forum report relies on the strategies of several multinational companies to draw its conclusions on how this potential can be leveraged: through local partnerships with government and local institutions; investment in local infrastructure and logistics; and using synergies through integrated environments.
Or, to sum up their findings in a word, collaboration. If exporters are meant to make the most of Africa as a future market, collaboration in multiple aspects will be the key to unlocking the growth they seek. First, political will is paramount, and partnering with the government of any specific African country can make or break any ventures made into a new market. Just ask the leadership at Volkswagen Group Africa, one of our member companies, who have made government relations the core of any market exploration – and who is cited in the World Economic Forum report as one of the successful pioneers when it comes to expanding into Africa.
The second tier of collaboration is with local business and community; by investing where one intends to operate, one can gain the support and respect of the local citizens – who will inevitably become the customers, suppliers, and economically speaking, the beneficiaries of one’s business down the line.
Finally, though it may sound contradictory, there are benefits to collaborating with your competitors. In establishing an industry where there might not be a substantial one yet, it makes sense to empower a local supply chain – and since suppliers can work with more than one client, larger companies can invest together to create that supply chain for their industry and ultimately build their mutual success.
To any exporters planning their path into Africa, consider how much more we can achieve if we pave that road together. Africa can be a success story – for all of us.
Quintin Levey, Exporters Eastern Cape Chairman
The Herald – Let’s Talk Exports – Published May 2024