The African Continental Free Trade Area (AfCFTA) Agreement could play a crucial role in addressing key sustainable development challenges in Africa, the UN Economic Commission for Africa (ECA) ‘Economic Report on Africa 2025’ states.

The AfCFTA Agreement provides a framework to boost trade-led growth, unlock regional value chains, boost competitiveness and ensure that Africa transitions from being a supplier of raw materials to a producer of high-value goods and services.

Despite growing global uncertainty, Africa can benefit from the new global trade landscape, characterised by fragmentation, regionalism and near-shoring, as it incentivises the continent to pursue deeper regional integration, the UN commission says.

Africa's growth is expected to gradually recover to 3.8% this year and 4.1% in 2026 on the back of increased private consumption and improved trade performance.

However, while growth has rebounded post-pandemic, it remains subdued and is still below the level needed to improve people’s living standards and reach the UN Sustainable Development Goals (SDGs), the report details.

Further, while Africa is again projected to be the second fastest growing region globally, most of its middle-income countries, which are more than half of African countries, are not on a trajectory to escape the middle-income trap in the medium term, the ECA points out.

Africa needs to reinforce the ongoing trend and look for its own, Africa-grown solutions for its development challenges, the report proposes.

The AfCFTA Agreement, which is an example of this approach, can help address the continent’s key challenges like energy gaps and food insecurity by fostering cross-border trade in energy products and encouraging African countries to adopt renewable-energy technologies.

This, in turn, can spur industrialisation, technology adoption and agroprocessing, as well as move Africa up in global value chains.

Implementing climate policies could boost Africa’s renewable energy use by 5% to 12% by 2045, the report says.

The AfCFTA can also tackle food insecurity by enhancing food market integration and boosting intra-African food trade, helping reduce the impact of climatic events on production and prices.

“A successful AfCFTA, driven by industrialisation and diversification, could thus significantly boost Africa’s trade and drive transformational change. It could shift Africa from primary commodity exports to higher-value industrial products, while raising intra-African trade by almost half.

“The agreement also positions Africa to strengthen trade ties with rapidly growing emerging markets like China, India and Türkiye, thereby strengthening its resilience against global shocks,” the ECA notes in the report.

Successful implementation of the AfCFTA Agreement over the medium term could also contribute to global trade and growth, thereby enhancing Africa’s competitiveness and its position as a global growth pole.

If accompanied by supportive policies fostering trade and investment, the AfCFTA can build livelihoods and social cohesion, thus contributing to the integrated, peaceful and prosperous Africa envisaged in the African Union ‘Agenda 2063: The Africa We Want’, the ECA adds.

Meanwhile, in terms of intra-African trade export increases from full implementation of the AfCFTA Agreement by 2045, the agrifood sector is set to increase exports by 60%, or $58.6-billion, by 2045. The most notable increases will be in grains and crops, milk and dairy products, sugar, rice, meat and processed foods.

Industry can increase exports by 48% by 2045, or adding $165.6-billion to its current export value. The most notable increases for this sector are wood and paper, chemicals, rubber, plastic and pharmaceutical products, vehicles and transport equipment, metals and other manufactured products.

Further, the services sector can look to increase by 34%, or $4.9-billion, by 2045, with notable benefits from tourism and transport.

The energy sector can increase exports by 28%, or $46.6-billion, by 2045, if the AfCFTA Agreement is fully implemented, with notable increases in trade of refined oil and mining products, the report says.

Africa stands at a critical juncture in its development, with immense potential driven by a youthful population, rich natural resources and expanding consumer markets, the report states.

The AfCFTA can play a role in addressing key challenges, such as energy access, food security, industrialisation and digital trade. By fostering intra-African trade, the agreement can reduce commodity dependence, boost manufacturing and strengthen Africa’s position in global value chains.

Additionally, the AfCFTA enhances Africa’s resilience amid global economic fragmentation by deepening regional integration and strengthening trade ties with emerging markets.

Successful AfCFTA Agreement implementation could boost Africa’s trade, inclusive growth and sustainable development, but full AfCFTA Agreement implementation requires strategic investment, well-designed policies and synchronised reforms at national, subregional and continental levels, the report highlights.

The AfCFTA is expected to raise Africa's GDP by 1.2% and welfare by 0.9% in 2045. However, high inflation, fiscal deficits and debt vulnerabilities remain significant barriers to growth.

Africa's debt-to-GDP ratio is projected to decline from 67.3% in 2023 to 62.1% this year, but debt servicing costs remain prohibitively high, crowding out development outlays, it notes.

To support the AfCFTA, Africa will need an investment of $120.83-billion in transport equipment by 2030, while also streamlining regulations to enhance market access and foster innovation.

Trade facilitation measures, such as harmonising customs procedures and reducing non-tariff barriers, are critical for maximising the benefits of AfCFTA, the report adds.

The report recommends that countries should develop robust regional value chains in key sectors, such as agroprocessing, automotive, pharmaceuticals and renewable energy.

This requires targeted industrial policies, investment in productive capacity and support for small and medium-sized enterprises, it adds.