Ethiopian Informer
By Habtamu W. Liben
ADDIS ABABA (EI) — Africa must urgently overhaul its fragmented trade model and establish integrated regional production networks to avoid economic marginalization and accelerate industrial growth, according to experts and a new report published Friday.
The report, entitled “Integrating Africa: From Threads to Hubs,” was co-launched on Friday by the African Union (AU), the United Nations Economic Commission for Africa (UNECA), and the World Bank, at the headquarters of the AU in Addis Ababa, the Ethiopian capital.
Noting that “Africa must deepen integration or risk deepening marginalization,” the report addressed the continent’s structural disconnect in trade integration, and offered a blueprint for unlocking the continent’s true economic potential.
It highlighted that Sub-Saharan Africa’s exports to the rest of the world are heavily concentrated in primary commodities, which are low in complexity, have limited domestic linkages, and are exposed to price volatility.
In contrast, the region trades more manufactured goods, processed food, and capital goods with itself than with the rest of the world. It said the structure of intra-African trade is characterized by higher-value products, stronger forward and backward linkages, and greater potential for industrial deepening, according to the report.
It, however, stressed that the level of intra-African trade remains underdeveloped, accounting for just 15–17 percent of the continent’s total exports, as about 85 percent of Africa’s trade goes overseas.
Highlighting a crucial alternative, the report revealed that the current state of intra-African trade offers significantly higher development returns, providing greater potential for industrial upgrading and creating vital regional jobs.
Stressing that deepening regional integration remains an “absolute necessity” for Africa’s socioeconomic development aspirations, the experts warned that prevailing trading patterns have trapped the continent at the bottom of the global value chain. They recommended prioritizing interconnected infrastructure, harmonized customs processes, and targeted investments to successfully build highly productive regional value chains.
According to the report’s findings, most individual African nations are too small and geographically fragmented to achieve industrial scale independently. It emphasized that regional integration is structurally necessary to expand market size, pool capabilities, and escape existing low-value, low-diversification capability traps.
The report indicated that Africa’s primary trade bottlenecks are not tariff barriers but regulatory fragmentation.
It discovered that roughly 60 percent of total trade costs stem from behind-the-border constraints, including customs clearance inefficiencies, sub-optimal logistics services, and poorly aligned domestic regulatory frameworks.
To overcome these barriers, the report recommended making economic systems fully interoperable across jurisdictions. It urged African governments to ensure that customs, digital data, financial payments, logistics, and institutional regulations can operate seamlessly across borders rather than solely focusing on standard tariff liberalization.
The report highlighted that industrial strategies must be regional by design to be truly effective. It advised linking national industrial incentives directly with regional sourcing and exports, allowing the continent to aggregate demand and effectively build competitive cross-border regional value chains.
African governments have been also urged to deepen and enforce regional agreements to support diversification. The report noted that the African Continental Free Trade Area (AfCFTA) Agreement must advance binding protocols on services, investment, and digital trade, alongside implementing credible dispute settlement mechanisms.
The report also recommended strengthening the joint provision of regional public goods. It emphasized that shared investments in transport corridors, integrated power pools, security, and digital platforms are absolute prerequisites for successful economic integration and structural transformation across the continent.
EXPERTS ECHOED THE URGENCY
Attending the report launching event, experts and policymakers urged for deeper, functional trade integration to unlock Africa’s economic and job creation potential.
Francisca Tatchouop Belobe, AU Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, highlighted that unlocking the continent’s massive integration potential requires addressing the practical barriers that continually increase the overall cost of doing business across national borders.
“The African Continental Free Trade Area (AfCFTA) has given Africa a historic framework for creating a more integrated continental market. Our next challenge is its implementation,” said Belobe, calling for practical action.
She urged African governments and institutions to invest heavily in industrial capacity, energy, and logistics to process and manufacture goods domestically. She also called on the continent’s businesses to lead this economic transformation. “The private sector must be at the center of this transformation. Governments and institutions create frameworks, but it is businesses that trade, invest, innovate, and create the jobs we definitely need.”
Noting that Africa’s much-needed integration must ultimately translate into tangible opportunities for the continent’s young people, the AU commissioner stressed that the desired continental market must also create the necessary conditions to foster entrepreneurship, attract long-term investment, and generate decent employment opportunities.
Ndiame Diop, World Bank Group Regional Vice President for Eastern and Southern Africa, pointed out that integrating regional markets will provide domestic firms with the crucial scale they currently lack, enabling them to build larger industries and specialize.
Diop emphasized that focusing on deepening intra-African trade integration does not mean abandoning international commerce. “This is not a choice between our neighbors and the world. Regional markets are where our firms will build the scale and efficiency to compete globally.”
For Africa to integrate successfully, he recommended reducing border delays and costly transportation friction. He also advised creating reliable payment systems that work seamlessly across borders, while urging governments to fully implement and enforce the AfCFTA agreement.
Echoing this sentiment, Stephen Karingi, director of macroeconomics, finance, and governance division at the UNECA, said that easing the movement of people and goods across African borders would deliver the largest economic gains for businesses across the continent.
He noted that facilitating the cross-border movement of raw materials, intermediate inputs, and finished products requires robust digitization, logistics infrastructure, and interoperable trade clearance.
Karingi emphasized that enhanced collaboration among African governments remains vital to ease the movement of people and goods across nations. He further stressed the role of African central banks in effectively supporting seamless cross-border commercial transactions.
