Africa is structurally positioned to lead in areas such as green industrialisation, the energy transition and food security, says consulting firm Boston Consulting Group (BCG) in its 'Africa Unleashed: Seizing Opportunity in a Shifting Geopolitical Landscape' report.

Long-term value will accrue to those who invest early in competitiveness, namely building local capacity, forming resilient supply chains and aligning with sectors poised for structural growth, says BCG Johannesburg partner Trudi Makhaya.

Africa’s fundamentals include a young population, vast mineral and agricultural endowments and unmatched renewable-energy potential. What matters now is the ability to act with foresight amid short-term volatility, she emphasises.

Africa’s trade and investment landscape is being reshaped by rising tariffs, shifting alliances and mounting geopolitical pressures. The report looks at how African countries will need to respond to a rapidly-evolving geopolitical landscape and what this means for relationships with key trading partners.

The African Continental Free Trade Area (AfCFTA) represents a unique opportunity to seize the full potential of intra-Africa trade, it states, adding that it is imperative that the AfCFTA succeeds. Leaders must respond to this new trade reality with clear priorities, coordinated action and long-term vision, the report authors advise.

“As global trade flows shift in response to geopolitical events, our projections show new opportunities for Africa and the wider Global South,” says BCG partner and associate director Tim Figures.

“Understanding the levers available to businesses and governments, and deploying these strategically, will be key to ensuring Africa benefits from these once-in-a-generation changes,” he emphasises.

There are many reasons for Africa to feel optimistic about the future, provided that countries on the continent understand the key strategic levers they can use, the report notes.

BCG projects that Africa’s total trade will grow by 3.5% a year to 2033, outpacing the EU at 2%, with the most significant shifts occurring toward Asia.

The continent’s largest trade corridor with China is forecast to grow by $173-billion. By comparison, trade with the EU is expected to grow by $100-billion, with India by $63-billion, with Association of South-East Asian Nations countries by $30-billion and the US by $12-billion, the report notes.

However, much of Africa's potential remains unrealised. Less than 5% of mined resources are processed locally, trade costs remain prohibitively high owing to fragmented infrastructure and youth unemployment persists despite growing demand for skills, the report highlights.

Additionally, recent tariff hikes could impose up to $5-billion in added export costs, with South Africa facing $2.6-billion in incremental tariffs.

Nigeria's manufacturing sector is struggling with tariffs, but also lacks preferential access into other major trade blocs, which limits export diversification. Tariffs on Kenya’s textile exports are expected to rise from 0% to 23% if the US’s African Growth and Opportunity Act is not extended, the report points out.

However, the AfCFTA is a high-potential platform that is still early in its journey. It brings together 54 countries under a shared ambition to create a $3.4-trillion single market and boost intra-African exports by 32%.

“If fully implemented, the AfCFTA is more than a trade deal. It is Africa's most ambitious platform for shaping a collective economic future,” says BCG Africa managing partner Lisa Ivers.

While the trade bloc has been slow to gain momentum and there is much work to be done to achieve this goal, it should be recognised that it took the EU more than 40 years to build a fully functioning single market.

Meanwhile, to stay competitive, companies must prioritise sectors and business models aligned not only with current trade incentives and cost advantages, but also with changing patterns of future demand, BCG recommends.

This could include using sustainability as a market access lever. Environmental standards are now embedded in trade policy, such as the EU’s Carbon Border Adjustment Mechanism.

Understanding these standards and meeting them early is a pathway to high-value export markets, the report states.

If business leaders want to unlock growth, they must engage strategically with governments and development financiers and champion the removal of non-tariff barriers while advocating for smart public incentives.

This becomes even more relevant in the context of the transformative economic potential of the AfCFTA, says BCG.