UNCTAD on how trade & industry can drive sustainable economic development in Africa

Trade and industry play a vital role in driving economic development in Africa by creating jobs, generating income, promoting diversification, fostering technological advancement, and positioning countries within the global marketplace. Richard Bolwijn, Director of the Investment Research Branch at UNCTAD, shared insights on how Africa can leverage these sectors to foster sustainable economic growth amidst challenging global economic conditions. The current economic outlook for Africa is being shaped by a more difficult global landscape marked by rising inflation, tightening financing conditions, and increased uncertainty for international investors. These macroeconomic challenges are exerting downward pressure on international investment, including in Africa. As a result, the continent is experiencing a slowdown in trade activities and investments, particularly in greenfield industrial projects and international project finance. Despite these challenges, certain sectors such as renewable energy, power, electronics, automotive, and value chain-intensive industries are showing resilience and presenting opportunities for growth. In order to recover from the decline in industrial projects post-pandemic, African economies need to identify key sectors to attract significant investment and explore opportunities to engage smaller and medium-sized enterprises to drive economic growth. One important avenue for industrial development in Africa is through special economic zones (SEZs). While there are over 200 SEZs on the continent, not all have been able to attract the intended level of investment. UNCTAD has emphasized the need for SEZs to adopt sustainable financial models to remain attractive to investors amidst technological advancements like Industry 4.0 and the digital economy. Despite the challenges, SEZs have the potential to contribute significantly to industrialization and economic diversification in Africa by providing the necessary infrastructure and proximity to urban centers and transport options. Integration of SEZs into the African Continental Free Trade Area (AfCFTA) Agreement is crucial for enhancing regional trade. While SEZs were initially focused on producing for external markets, there is a growing need to explore opportunities for intra-regional trade within the AfCFTA region. Establishing appropriate infrastructure and border zones will be vital in facilitating cross-border trade and maximizing the potential of SEZs to drive economic growth within Africa.