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Global trade

CONNECTING AFRICA

TO THE WORLD

Africa is expected to outperform much of the world in trade growth in the
coming years. Predictions of the continent’s economic awakening are nothing
new, but there are good reasons why this time it’s different.

ust 50 kilometers (31 miles) away from countries’ efforts to improve import/export and VW manufacturing plants in Rwanda,
Rwanda’s capital of Kigali and a mere processes and infrastructure. It’s these where the company is building new cars on
15-minute drive from the much- improvements that local observers believe top of existing production in Morocco and
Janticipated (and nearly complete) will make the difference. South Africa.
Bugesera International Airport, the Bugesera
Special Economic Zone (SEZ) has become WHAT’S CHANGED, AND THE AFRICAN TIGER?
an important economic and cultural hub. WHY DOES IT MATTER? Africa’s projected trade bonanza takes
And it’s not the only one. There are more Africa has been touted as the ‘next big us back to ten years ago when Vietnam
than 200 SEZs across the continent. thing’ time and again for two decades, but was on a similar cusp. There are plenty
SEZs are significantly boosting foreign the predictions never panned out. In its of comparisons. One of Vietnam’s main
direct investment (FDI) into African Economic Development in Africa Report advantages was its proximity to China,
countries. Rwanda is a prime example. 2022, the United Nations Conference where rising salaries hindered low-cost
Punching above its weight, the country is a on Trade and Development (UNCTAD) production, sending manufacturers looking
symbol of optimism and part of an upbeat revealed that in the past 20 years, one of the for alternatives. Vietnam smartly leveraged
forecast backed up by the DHL Trade continent’s biggest obstacles to trade growth the attention to attract FDI in high-
Growth Atlas 2022, which predicts that Sub- was the lack of export diversification. value tech goods manufacturing,
Saharan Africa will have the third-fastest Africa was the world's second least export- such as smartphones.
trade growth among major world regions diversified trade region during that time. We’re seeing similar
through 2026. Of the ten countries with But things are different now. Rather developments
the fastest projected trade growth, five are than merely announcing grand plans, in Africa.
in Africa: Democratic Republic of Congo, policymakers are putting their money The growing
Niger, Rwanda, Senegal, and Uganda. where their mouth is this time. As a result, middle class
It's no fluke, either. African startups infrastructure is going up right before also resembles
reportedly attracted a record $3.5 billion our eyes. For example, internet access Vietnam. In
in venture capital investment in the first in Rwanda puts many American cities the last 30
half of 2022, bucking the global financial to shame. In Senegal, they’re building a years, it has
downturn elsewhere. brand-new “smart” city. Across Africa, tens tripled to
But haven’t we been here before? of thousands of kilometers of highway are
Stories of Africa’s economic awakening are under construction, with hotels and filling
nothing new. And we can trace some of stations popping up along the way and
the growth in 2022 to pandemic recovery. creating mobility opportunities.
The Atlas demonstrates that Africa’s trade The population of Africa is now 1.4
took a huge hit in the wake of Covid-19, billion, with 60% under 25, according to
meaning part of the acceleration reflects a UN statistics. Demand for everything –
recovery from that blow. houses, cars, TVs – is on the rise. Add the
The other part of the story is that we availability of mobile money, which is more
expect Sub-Saharan Africa’s GDP growth accessible across the continent than ever,
to gain momentum, naturally propelling and you have all the ingredients for growth.
the region’s increasing trade flows even What’s more, the business world is
further. The African Continental Free Trade noticing and pouring tens of billions
Agreement (AfCFTA) makes long-term into the region. For example, there are
prospects brighter still, bolstered by many Volkswagen (VW) assembly lines in Ghana

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