Sixty years ago today, May 25, 1963, a group of 32 independent African nations embarked on a great journey.
On that date, since then celebrated as Africa Day, delegates gathered in Addis Ababa, Ethiopia to found the Organization of African Unity (OAU), an historic moment in Africa’s long quest for shared freedom and prosperity.
Over time, the OAU grew and evolved into today’s African Union (AU), a partnership of 55 member states that promotes social, cultural, political, and economic cooperation across a dynamic, fast-growing continent of more than 1.4 billion people.
Africa’s journey continues apace. For 2023, the AU has picked its theme as ‘the acceleration of the African Continental Free Trade Area implementation’, underscoring the importance — and urgency — of economic unity and strength amid multiple and overlapping global crises.
Making Waves
Back in 1963, the effects of colonialism were raw, including for independent African states, and the continent was largely poor, rural, and relegated to the sidelines of the world stage. Today, Africa’s cultural influence unfolds worldwide, its cities and economies are growing, and its young population is making waves across the finance, tech, manufacturing, and other sectors.
Even so, many African countries are among the world’s poorest, unemployment is stubbornly high across the continent, and health and social indicators are sorely lagging. Climate change is a growing threat—and threatens to undo much of Africa’s recent progress.
“Despite the real challenges — and they are formidable — I am strongly optimistic about Africa’s future,” said Sérgio Pimenta, IFC’s Vice President for Africa. “The progress Africa has made in the last 20 years has been remarkable and though there is much yet to be accomplished, Africa no longer follows but is a leading innovator in many fields, and its young population is the promise for more.”
Photo: Dominic Chavez/IFC
Record Financing
For IFC, Africa is a major and growing focus.
In fiscal year 2022, IFC provided record financing of $9.4 billion to 36 African countries, the institution’s largest ever annual commitment to the continent. The funding is helping to develop regional pharmaceutical manufacturing, increase intra-Africa trade, expand access to climate financing, and strengthen food security, among other priorities.
Regarding trade, the AU’s 2023 theme, IFC’s investments last fiscal year included $3 billion in trade financing to help unlock intra-Africa trade. In 2022, IFC also launched its $1 billion African Trade and Supply Chain Finance Program.
“Trade is an excellent focus for Africa because trade means so much more than simply shifting goods and services across borders,” said Pimenta. “Trade also builds economic and social bridges, facilitates knowledge transfers and nurtures win-win outcomes for participating countries. IFC’s support for increased intra-African trade reflects our strategy to promote private sector growth that brings lasting, sustainable benefits.”
Photo: Dominic Chavez/ IFC
AfCFTA
For too long, however, Africa has been divided by mountains of tariffs and barriers that often means it is easier for African businesses to trade with overseas markets instead of those within Africa.
The African Continental Free Trade Area (AfCFTA) was launched to reduce and remove those barriers. Its first phase took effect in January 2021, with the goal of delivering tangible, lasting benefits in terms of jobs, growth, and poverty reduction.
Besides that, AfCFTA’s goal of connecting Africa with smooth and strong trade routes — both physical and virtual — will contribute to uniting the continent as never before, economically but also culturally as interdependence grows and convenes African innovators and more.
For now, the reality is that trade remains constrained across Africa, but work is ongoing to make it both faster and easier — and this is essential to help fully realize the dreams of those determined delegates who travelled to Ethiopia way back in 1963.
Published in May 2023