Logistics drives Africa's trade and economic transformation

The celebration of Africa Day 2023 provided an opportunity to reflect on the continent's progress and growth potential. Globally, despite inflation and supply constraints, trade has become a powerful driver of economic growth and recovery, and Africa is no exception.

According to the DHL Trade Growth Atlas 2022 forecast, sub-Saharan Africa will have the third fastest trade growth among the world's major regions by 2026.

Policymakers go beyond rhetoric and take concrete steps to improve import and export processes and infrastructure. They are also accelerating the adoption of technological advances and creating opportunities for mobility and connectivity.

With nearly two-thirds (60%) of Africa's 1.4 billion population under 25 years old, demand for goods and services is increasing significantly. The business world has taken notice of this favourable environment and is investing significantly in the region.

In the first half of 2022, African start-ups received $3.5 billion in venture capital investment, which shows the growing confidence and support for entrepreneurship in the region, as reported by Pretoria News, a partner of TV BRICS.

Furthermore, the African Continental Free Trade Agreement (AfCFTA) has significantly increased long-term prospects, boosting trade and economic cooperation among African countries. In addition, the creation of over 200 special economic zones across the continent has attracted significant foreign direct investment (FDI), stimulating economic growth in a number of countries.

The most important driver of Africa's expected surge in trade is logistics. It plays a key role in connecting countries, facilitating trade and boosting economic growth.

African exports of goods and services have shown the fastest growth rate in the past decade, but they still account for only 3 per cent of world trade.

To encourage effective export diversification, the UN Conference on Trade and Development (UNCTAD) recommended policies that promote comprehensive access to innovative financing technologies for enterprises of all sizes.

Introducing a new trade policy framework would help expand and diversify access to export markets, while strengthening intra-regional trade.

AfCFTA has the potential to reduce customs barriers between African countries, ultimately accelerating much-needed socioeconomic growth. The development of multimodal corridors across the continent will also help unlock the benefits of the trade agreement by expanding trade links and facilitating the efficient transport of goods.

The development of intra-African trade will undoubtedly bring stability and prosperity to the continent.

The key role of the logistics sector cannot be overstated as it has the means to unlock Africa's rich resources and facilitate uninterrupted trade within the continent and beyond.

Photo: istockphoto.com