The 'Trade in Transition' study, commissioned by freight and logistics company DP World, shows that Africa’s business leaders anticipate growth this year, driven by investment in technology to increase efficiency and boost resilience, amid economic, geopolitical and climate instability.

Nearly three-quarters of leaders that participated in the study believe public sector actions, such as boosting regional trade agreements, have helped their supply chain strategies in the region.

The new research forecasts a booming African trade landscape in 2024, with senior executives predicting a surge in intra-Africa trade, fuelled by new trade pacts and technology investments, DP World says.

However, African firms remain cautious as inflationary pressures, economic uncertainty and political instability threaten to impact on growth. More than 26% of the executives surveyed identified heightened inflation and economic uncertainty as the primary limitations on expanding imports, which is a 7% increase on the previous year.

Additionally, nearly 20% pointed to political instability in crucial source markets as their primary constraint, a 4% year-on-year increase.

“The perspectives of the African trade experts and senior executives were taken for the study during a period of unprecedented transformation, as heightened global geopolitical risk, climate change and significant advancements in technologies create both challenges and opportunities,” the company notes.

Owing to the African Continental Free Trade Area (AfCFTA) Agreement, executives across the continent expect intra-regional trade to grow this year. About 28% of the surveyed business leaders expect sub-Saharan Africa to be their largest export market this year, up from 19% of respondents the previous year.

Only Europe, at 38%, and North America, at 34%, rank higher in the list of regions expected to provide the greatest contribution in terms of export sales, DP World says.

“Almost three-quarters agreed that government actions, like enhancing regional trade agreements, have positively impacted their supply chain strategies. This highlights the significant role governments can play in creating a favourable environment for business growth and trade expansion,” it emphasises.

Further, owing to persistent challenges posed by systemic issues and political instability, businesses across Africa are strategically embracing technology as a transformative investment.

“While the AfCFTA should help to reduce a significant amount of tariff barriers, long transport times and high costs owing to significant border control and long waiting times, complex customs and bureaucracy remain a concern.

“High transport costs were cited as the second biggest challenge facing businesses when increasing both their import and export sales. In response, businesses in Africa are increasingly investing in technology to adapt,” the study shows.

Notably, 38% of executives identified the use of digital tools for improved inventory management as the primary strategy to reduce overall trade and supply chain costs in Africa.

Further, 45% of executives plan to implement advanced automation and robotics to gain real-time insights and forecast disruptions in their supply chains in 2024.

These align with global findings, which show that executives across all sectors and regions found technologies that improve supply chain efficiency and resilience to be, by far, the main source of optimism for the future of global trade, the study adds.

“Regional trade agreements, exemplified by [the] AfCFTA [Agreement], stand out as powerful tools to address the intricate challenges within the region’s trade and supply chain infrastructure. The nine-percentage-point increase in the proportion of Africa-based executives projecting that sub-Saharan Africa will be their biggest export market is a case in point,” says DP World sub-Saharan Africa CEO and MD Mohammed Akoojee.

“The synergy of public and private sector partnerships to enhance investment, strengthened trade agreements, and technological advancements also positions the continent for growth and resilience,” he adds.

“The findings of this report reveal a remarkably positive outlook for African trade in 2024 and shed light on the beneficial effects of trade agreements like AfCFTA. Through such regional cooperation, economies can leverage scale, enhance competitiveness and attract significant investment across the continent,” says economic think-tank Economist Impact new globalisation global lead John Ferguson.

“The report also reflects a profound optimism regarding technologies’ potential to address systemic and economic challenges, showcasing adaptability and confidence in its role in enhancing supply chain efficiency and resilience,” he notes.