The latest round of trade madness from the US highlights the importance of finding alternative export markets. In this context the African Continental Free Trade Area — which goes by the unlovely acronym of AfCFTA — should provide new opportunities.
But the AfCFTA is still in effect only an in-principle agreement, with far more negotiation needed to turn it into practical commitments. More fundamentally, stepping up regional trade requires not just lower tariffs but also much greater commitment to more proactive measures to encourage new kinds of production across Southern Africa.
The AfCFTA still has to be translated into agreements on specific tariffs and on rules of origin — that is, how much of a product must be produced on the continent to qualify for lower tariffs. Given Africa’s dependence on imported manufactures, the latter are needed to ensure lower tariffs do not ultimately end up encouraging imports of goods made mostly overseas.
But modest trade levels within Africa arise primarily not from legal trade barriers but from poor logistics across the continent and, even more, relatively low incomes. Such as India and China, Africa accounts for about 18% of the world’s population. However, according to World Bank data it contributes just 3% of global GDP and trade. For comparison, China alone generates 17% of the world’s GDP and 10% of trade. For India, which still ranks as a low-income economy, the figures are 4% for GDP and 3% for trade.
While Africa’s share in the world’s population increased from 12% in 2010 to 18.5% in 2024, its share in global GDP and trade remained virtually unchanged. Even excluding SA, which has grown under 1% a year for the past decade, annual GDP growth in Africa averaged just 3.3% over the past decade, compared with 3.1% for the rest of the world. Yet Africa started with far lower per-person GDP, now about a tenth of the global average.
Relatively low incomes across Africa are a major reason for slow SA growth. Most obviously, SA cannot look to the region for help in financing either logistics upgrades or new industries. Meanwhile, low incomes dampen demand across the continent. That’s why Botswana and Namibia, which rank as middle-income countries, buy a quarter of SA’s exports to Africa, though they hold only 0.5% of the continent’s population.
These realities set SA apart from the other regional economic centres in the Brics bloc. The GDP per person in Brazil, Russia, India and China is less than 2.5 times as high as their neighbours. SA GDP is more than five times the average for the continental Southern African Development Community, and almost four times that for Africa as a whole.
Experience internationally and in the Southern African Customs Union suggests that free trade alone does not promote more equitable growth. Instead, it typically cements the dominance of more advanced countries, in this case SA itself. Cutting tariffs will give some SA producers short term advantages in other African countries, but if it systemically out-competes more advanced manufacturing and services in these countries it will ultimately sustain the cycle of constrained markets and investment for SA, as well as the rest of the continent.
Ultimately, the AfCFTA can drive growth in SA as well as the rest of the continent only if bolstered by vastly expanded efforts to increase investment in both regional logistics and new productive capacity in SA’s neighbours. That will impose some hard trade-offs for SA producers in the short run, as they will have to accept greater competition from neighbouring countries. Still, it is a necessary, though usually undervalued, prerequisite for faster growth in SA itself.
• Makgetla is a senior researcher with Trade & Industrial Policy Strategies.
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