One key factor limiting firms’ growth is the fragmented nature of the African market, which currently comprises mostly small economies with limited economic and political linkages. There are eight partly overlapping regional trade zones, none of which includes more than half of Africa’s countries”.
Slowing growth in China, a collapse in commodity prices, and numerous security crises, have brought Africa’s GDP growth down to 3.3% in 2010-2015, barely keeping up with population growth, and down from the 4.9% in 2000-2008. But this is not the whole story. 1) Indeed, aggregate GDP has been dragged down since 2010 by faltering growth among oil exporters and security crises in the Sahel and North Africa; but in the rest of Africa, growth has accelerated, from 4.1% in 2000-2010 to 4.4% in 2010-2015. 2) Africa is undergoing a profound long-term transformation: rapid digitization, urbanization and growth in the working-age population (it will outnumber that of China and India by 2034). Spending by Africa’s consumers and businesses totals $4 trillion. By 2025, private spending could reach $5.6 trillion. Africa can almost double its manufacturing output, to nearly $1 trillion, by 2025 --75% of that growth for local markets--. But Africa still imports one-third of the food and beverages it consumes. It imports 15% of the cement it uses. Large African (excluding South African) firms’ average annual revenue of $2 billion is half that of firms in Brazil, India, Mexico and Russia. Africa only has 60% of the large firms it needs. One key factor limiting growth is the fragmented African market. There are eight overlapping regional trade zones: none includes more than half of Africa’s countries. Africa has inadequate transport links, and Africans need visas to travel to more than half the countries of the continent. A more integrated market would create economies of scale and appeal to investors. Africa’s economic potential is massive, thanks to favorable demographic dynamics, fast-growing cities, burgeoning domestic markets, and a digital revolution.