Trade and Investment

The Challenge

Trade is an essential component of economic growth and provides an opportunity for African countries, communities, and producers to earn a living.  After years of impressive growth, Africa has suffered a slow-down in the wake of the financial crisis, the effects of which have been compounded by the preceding fuel and food crises.  Not only are African countries struggling to build their own markets and reduce poverty through trade, but they will have an even more difficult time with the decrease in investment, demand for African products, and remittances, and will rebound slower than developed and emerging economies.

For decades, sub-Saharan Africa has struggled to take advantage of global trade.  Though some progress has been made in recent years, the global financial crisis threatens to diminsh these gains.  Sub-Saharan Africa faces the world's greatest challenges in accessing local, regional, and global markets.  The region also faces significant supply-side challenges that need to be addressed so that as policies are improved, Africans can produce competitive products and transport them to markets.

The Opportunity

Economic growth, driven by trade and investment, is the critical engine that will end poverty in sub-Saharan Africa. Addressing the underlying imbalances in the world trade system and investing in long-term development of the trade sector is more critical than ever for Africa to recover from the global financial crisis, meet the MDGs, and build resistance to future economic shocks.  

Even if Africa captured only a small percentrage of global trade it would make a big difference: in 2008, 1% of global trade was worth $195 billion, more than five times the development assistance sub-Saharan Africa received that same year.  The ability to export products to regional and international markets can be a vital source of income for many sub-Saharan African countries.  Developed countries can provide much needed investment in infrastructure and capacity building.  Finally, increasing trade and investment among African countries could bring real benefits in increased employment and higher incomes.

                                                                                         Read our full trade and investment issue brief.