Africa’s Integration Push Is Running Into a Production Problem

Africa has spent years building the rules and institutions for a continental free-trade area. African leaders are now putting greater emphasis on a more fundamental constraint: the continent must produce more of what it intends to trade.

That message emerged strongly from the African Union’s Eighth Mid-Year Coordination Meeting, held on 4 October in El-Alamein, Egypt, bringing together the AU, Regional Economic Communities and Regional Mechanisms to assess continental integration and implementation of Agenda 2063.

The meeting identified inadequate productive capacity, infrastructure deficits and insufficient financing among the major obstacles to integration and argued that establishing a continental free-trade area alone will not be sufficient.

“Africa must produce in Africa, transform in Africa and add value to its resources in Africa,” AU Chair and Burundi President Évariste Ndayishimiye told the meeting, according to the African Union’s official account.

The AfCFTA’s production challenge

The African Continental Free Trade Area addresses tariffs, market access and many of the regulatory barriers that have historically fragmented African commerce. But lowering barriers does not by itself create factories, power plants, logistics networks or competitive companies.

The AU meeting therefore placed productive and manufacturing capacity alongside trade facilitation. Leaders called for stronger African value chains, technology transfer, investment and greater processing of the continent’s natural resources before export.

The meeting also called for continued removal of unnecessary non-tariff barriers, stronger cross-border payment systems and increased participation by African enterprises, including SMEs, in innovation, production and value addition.

Infrastructure determines what can be traded

Production is closely tied to infrastructure. Manufacturers need reliable power; exporters need functioning roads, railways and ports; digital companies need connectivity; and regional businesses need payment systems that work across borders.

The coordination meeting consequently called for accelerated investment in cross-border infrastructure and transport corridors, stronger digital connectivity and further implementation of the Single African Air Transport Market.

These are not separate policy agendas. They determine whether the AfCFTA can evolve from a legal framework into an integrated production and trading system.

From raw materials to regional value chains

The value-addition argument is especially important for resource-rich African economies. President Abdel Fattah El-Sisi told the meeting that Africa should move beyond its traditional role as a supplier of raw materials and instead strengthen manufacturing, integrated value chains and technology transfer.

That would change the economic logic of continental trade. Instead of countries primarily exporting commodities outside Africa and importing finished goods, regional value chains could allow raw materials, intermediate products, services and manufactured goods to move between African economies during production.

The challenge is execution. Industrialisation requires long-term capital, energy, logistics, skills, technology and predictable regulation. Many of the constraints identified by African leaders have been recognised for years.

The significance of the latest AU meeting is therefore less the diagnosis than the priority being attached to it: Africa’s integration project cannot ultimately be measured only by the size of the market the AfCFTA creates. It will also be measured by what African economies are able to produce, process and sell within that market.

Sources: African Union — 8th Mid-Year Coordination Meeting outcomes; African Union — meeting readout.