Attracting investment in Africa: seizing this AfCFTA moment

2025 has surprised even the most hardened commentators and forecasters, particularly those that work in trade. Tariff escalations, pauses, and volte faces have dominated recent headlines, with no signs of these announcements slowing down. Since the year began, over 150 restrictive trade measures have been put in place by governments, ITC analysis shows, with more feared to be on the horizon. Concerns over the stability of the international trading system are now running rampant, with any disruptions coming at very real costs for those who can least afford it. 

At the same time, the field of international development has been turned upside down, even as some of the more recent shifts often reflect an intensification of longer-running trends. Many aid budgets have been cut, while many donors are shifting their priorities to meet a wide range of demands and continue living up to their commitments to their taxpayers. Already, the Official Development Assistance (ODA) cuts that governments have announced in 2025 could amount to between a 9–17% drop from last year’s ODA levels, according to the OECD’s latest projections. While the direction of future ODA decisions by governments remains to be seen, one thing is clear for those working in trade: relying on the long-standing “aid for trade” paradigm of even recent years will not work. And paralysis is not an option. Nor does it have to be. 

That is where agreements like the African Continental Free Trade Area (AfCFTA) come in. Along with being the economic engine of the African Union’s Agenda 2063, the AfCFTA holds the potential to be one of the most transformative trade treaties in history. And after years of extensive preparatory work and pilot initiatives to test out its provisions in practice, the AfCFTA is now speeding up towards full implementation. 

The AfCFTA’s potential economic gains are immense: if tariffs within the continent are fully slashed, intra-African trade could grow by an impressive $22 billion by 2029. Along with slashing tariffs, the treaty includes dedicated protocols on critical issues ranging from women and youth to intellectual property and the digital economy. It has a dedicated investment protocol for increasing intra-African investment flows — critical for greater financial self-sufficiency — and sets out measures for making the investment environment more predictable. The agreement can also make it possible for governments to develop a far larger resource base domestically, facilitating domestic resource mobilisation and improving revenue predictability and resource management. 

A fully integrated African market of 1.4 billion people, which builds on years of integration progress within and among the African regional economic communities, can also be a powerful draw for greater foreign direct investments from outside the continent. This includes those investments that contribute to essential trade-related infrastructure, along with those investments that are sorely needed for increasing processing capacity, especially in those value chains that hold the most promise for creating value-added jobs for small and medium-sized enterprises. 

Working with the African Union Commission and the European Union, ITC’s Made by Africa: Creating Value Through Integration report analysed over 400 such value chains, categorising these based on whether developing them was feasible and desirable in terms of the continent’s development objectives, and landing on 94 that could be a strong fit. 

Since then, ITC has been further analysing three of these value chains — formulated complementary foods, pharmaceuticals, and automotives — with the resulting analysis informing pilot projects for the EU’s Global Gateway. In parallel, ITC and UNIDO, with support from the European Union and in close collaboration with African partners at the continental and REC levels, is putting in place the Africa Trade Competitiveness and Market Access Initiative to support value addition capabilities and activities, along with addressing issues ranging from market access barriers to technology transfer. These efforts are all inspired and informed by what the AfCFTA can deliver, and driven first and foremost by local actors, local needs, and local priorities. 

But the value of the AfCFTA goes far beyond its potential for full-fledged economic transformation and greater intra-African trade. It also provides a forum through which African economies can exchange experiences and craft new ideas for South-South and global cooperation, together helping rebuild trust in the multilateral arena. It creates a powerful platform for African governments to advocate globally on behalf of the smallest and most vulnerable, who too often find themselves outside of trade conversations entirely. And it creates an invaluable opportunity for showing to the world what connected, sustainable, and inclusive trade can look like in practice. 

In other words, the AfCFTA’s success can be the shot in the arm that our multilateral system needs, helping counter a global landscape where uncertainty reigns supreme and pessimism risks taking a firm hold. But whether that happens is up to each and every one of us.