Africa’s Trade Objectives Achieved Locally Through Energy and Transport Initiatives

Analysis in brief: The goal of the African Continental Free Trade Area is to make Africa a single market with no trade restrictions between countries. The work to make that a reality is being carried out on local levels between countries.

The African Continental Free Trade Area (AfCFTA) stands as a monumental blueprint, ready for its structural realization. While the architects of this treaty have laid down the framework, securing commitments from the majority of African nations, the challenge now lies in the implementation. The groundwork necessitates local engagement as individual countries focus on crafting legislation that will give life to this vision. By dismantling tariffs and trade barriers, the AfCFTA aims to significantly enhance cross-border trade across the continent, enabling countries to trade more freely among themselves.

This initiative is poised to create new markets at regional levels. By replacing expensive imports from Asia and Europe with locally produced goods, opportunities for job creation can flourish, leading to stronger economies and higher living standards. The UN Economic Commission for Africa forecasts that by 2040, AfCFTA could boost intra-African trade by as much as 25%, generating an additional US$70 billion in trade that would not exist otherwise.

It’s crucial to recognize that governments function differently from businesses. Their interference can distort market dynamics. The ideal operation of the AfCFTA may be undermined if governments impose regulations that disrupt supply and demand. Furthermore, the lack of cohesive guidance from the African Union means that it is up to individual countries to adapt and harness local business input to identify trade possibilities. Businesses, therefore, play a critical role in exploring newly opened markets and determining how to cultivate them. Governments can support this endeavor by addressing specific infrastructure needs, such as:

• Do we need new roads or railways to transport exports to other countries?
• Does our electricity infrastructure need expansion for factories to thrive?
• Is there a need for new regional airlines that comply with airspace regulations outlined in the AfCFTA?

These questions illustrate how the governments can facilitate the AfCFTA by investing in infrastructure projects, which are rapidly gaining momentum across Africa.

Malawi and Mozambique: Pioneering Cross-Border Collaboration

In a significant move towards enhancing regional trade, Malawi and Mozambique have agreed to establish one-stop border posts as of March 2025. This agreement will streamline border processes as part of the Southern Africa Trade and Connectivity Project aimed at implementing the AfCFTA in the region. With this collaboration, truck drivers will be able to obtain customs permits directly at the border instead of navigating complex bureaucratic procedures, thus greatly improving operational flexibility.

Notably, the underdeveloped regions of Malawi’s Mangochi Province and Mozambique’s Niassa Province are expected to receive a substantial economic boost from this initiative. As part of their trading strategy, Malawi is set to launch a fleet of drones to combat smuggling while establishing cargo warehouses on both sides of the border. The World Bank has committed to financing these efforts, providing US$150 million to Malawi and US$230 million to Mozambique for road infrastructure improvements aimed at enhancing regional value chains and trade coordination.

Bilateral Projects Addressing Energy Needs

African nations are increasingly recognizing the importance of energy cooperation as they work towards achieving the objectives of the AfCFTA. A landmark initiative includes the South Sudan-Sudan energy pipeline, which underscores the positive relations being fostered between these nations. The reopening of a major oil refinery in South Sudan, capable of producing 90,000 barrels per day, marks a significant step towards economic stability for the country.

In East Africa, transformative energy projects are arising in line with AfCFTA goals. The Eastern Electricity Highway Project aims to transmit 200 MW of electricity from Ethiopia’s new hydroelectric dams to Kenya and Tanzania, creating an annual revenue of US$200 million. Furthermore, the establishment of the East Africa Power Pool allows 13 member states to trade renewable energy, thereby facilitating a transition from fossil fuels.

Additionally, the African Atlantic Gas Pipeline is set to connect Morocco to Nigeria, passing through numerous countries in West Africa. This ambitious project is designed to enhance energy security and create jobs while providing fuel access to millions.

Rail Transportation: A Sustainable Option for AfCFTA

The AfCFTA actively promotes the use of rail transport over road transport due to its efficiency and environmental benefits. For instance, construction is underway on the Lobito Corridor Railway, which will connect Angola’s Port of Lobito with the Democratic Republic of Congo and Zambia. This railway will provide a vital alternative for these landlocked countries, facilitating the export of their mineral resources and reducing their reliance on road transportation.

With a budget of US$786 million, the Lobito Corridor project is expected to enhance local manufacturing capabilities, enabling the production of value-added goods. This development ensures that the railway infrastructure not only serves exports but also supports local industries by providing necessary inputs for production.

Critical Points

• The AfCFTA provides a framework for boosting cross-border trade, with nations executing the agreement through local and bilateral projects.
• Private sectors are instrumental in communicating trade needs to governments, leading to targeted infrastructure investments.
• Globally, energy and transportation infrastructure projects dominate initiatives driving the AfCFTA forward in 2025.