Regional challenges are leading to greater diversification strategies, with 46% of African executives surveyed opting to diversify their supplier base globally, while only 16% are regionalising.
Despite ongoing trade challenges, Africa’s focus on regional integration through the African Continental Free Trade Agreement (AfCFTA), along with proactive global engagement offer a roadmap to sustainable growth, according to the latest Trade in Transition study supported by DP World.
The dynamic trade landscape in Africa and progress on AfCFTA are central themes of the study, released at the World Economic Forum in Davos, last week. Commissioned by Economist Impact and supported by DP World, the research presents the perspectives of African trade experts, senior executives, and researchers to forecast the trading landscape in 2025.
It highlights a roadmap to sustainable supply chain growth – anchored by regional collaboration and proactive global engagement to source products and services from across the world.
Key Highlights:
- AfCTA Advancing Cautiously with Optimistic Future Developments — While the AfCFTA aims to create a single market across 54 countries – lowering tariffs and boosting intra-African trade – only 31 of the 48 signatories have initiated trade under the agreement. Key challenges include political instability (cited by 40% of executives) and slow implementation (32%).
- Infrastructure Developments – Africa’s infrastructure remains a barrier to trade, yet there are promising projects underway that will start to address gaps. The Lobito Corridor railway connecting Angola to the Democratic Republic of the Congo and Zambia is expected to improve trade logistics. Similarly, the rehabilitation of the Tanzania-Zambia railway will enhance East-Africa’s rail-sea transport network, facilitating cargo transport from Zambia’s mines to Tanzania’s coast.
- Global Diversification – Nearly half (46%) of the surveryed executives said they were diversifying their supplier base globally to mitigate trade risk, compared to only 16% focusing on regionalisation. Although China remains Africa’s largest trading partner, countries such as India, the United Arab Emirates, and Turkey are emerging as important players in Africa, offering an array of economic partnerships. This diversification reflects the continent’s ambition to reduce dependency on a single partner. To increase these engagements, however, executives have called for more favourable trade agreements (cited by 35%) and supportive government policies and incentives (25%).
- Digital Transformation — To mitigate regional trade costs, companies are turning to digital tools – a top strategy for 34% of the executives surveyed in Africa. But advancing technology use, particularly of artificial intelligence-powered tools, has been hindered by the continent’s data deficit – which must be addressed to improve supply chain efficiency and foster resilience.
- Sustainability Challenges — Despite the impact of climate change on African agriculture (responsible for 13% of all African exports in 2023), sustainability has become a lower priority for African executives compared to last year (27% compared with 15% globally). This is largely due to financial constraints and economic and geopolitical considerations taking priority. Access to green technologies (55%) and supportive government policies (50%) are critical to improving climate resilience.
Mohammed Akoojee, CEO & Managing Director, DP World sub-Saharan Africa, said:
“Although trade challenges persist, Africa’s commitment to regional integration through the AfCFTA and its proactive global engagement present a viable strategy for sustainable growth. Africa’s supply-chain potential can be realised over the next decade with sustained investment in infrastructure, education and capacity building.
By addressing systemic barriers and embracing innovation, Africa can unlock its vast trade potential and secure a stronger position in the global economy. As DP World, our role is to support our customers and key stakeholders to navigate these trends across the continent and improve trade flows.”
John Ferguson, global lead, new globalisation, Economist Impact, added:
“In 2025 and the foreseeable future, global trade will be shaped by three forces: shifting geopolitics, climate change, and a new wave of AI and automation. Yet, businesses are not retreating from international trade but are stepping up to the challenge. Firms that stay agile and cost-efficient will have the edge. Firms that also combine risk management with AI experimentation and openness will be best placed to win in this new chapter of globalisation.”
To view the full report, please click here.