Key Developments in Africa: Opportunities and Challenges

Nov 09, 2025 0

Sub-Saharan Africa (SSA) is a highly diverse region that includes low-, lower-middle-, upper-middle-, and high-income countries. It also includes 20 fragile or conflict-affected countries and 13 small states with small populations, limited human capital, and constrained land area. Despite the diversity, the region faces both unique challenges and significant opportunities for growth and development.

Map of Sub-Saharan Africa

Economic Growth and Projections

Between 2002 and 2023, Africa experienced strong economic growth, enhancing its appeal for trade and investment. From 2000 to 2010, the continent’s economy grew by 4.8% annually, outpacing the global average of 3.1%. Africa’s growth slowed to 3.1% between 2011 and 2020 but remained above the global average of 2.4%.

According to the UN World Economic Situation and Prospects (WESP) 2025, economic growth in Africa is expected to increase from 3.4% in 2024 to 3.7 per cent in 2025 and 4% in 2026, driven by the recovery in Egypt, Nigeria, and South Africa. According to the latest regional economic update, growth in SSA is projected to rise from 3.3 percent in 2024 to 3.5 percent in 2025 and accelerate to 4.3 percent in 2026-27. While East Africa shows strong growth, Central Africa struggles with stagnant oil production and political instability. Expected per capita growth of 1.8 percent on average in 2025-27 will help reduce poverty only modestly. After peaking at 43.9 percent in 2025, the share of people living on $2.15 per day (2017 PPP) is projected to decline to 43.2 percent by 2027.

Challenges to Trade and Investment

Cascading global crises, including COVID-19 and the war in Ukraine, has hit African economies hard. Interconnected crises, including geopolitical conflicts, the pandemic and commodity price shocks, have disrupted supply chains, raised trade costs and hampered investment, aggravating Africa’s structural weaknesses and vulnerabilities. Reliance on foreign markets, volatile commodity exports, high debt and weak infrastructure have deepened the continent’s vulnerabilities.

However, this growth was closely tied to commodity price booms. Over half of African nations depend on oil, gas or minerals for at least 60% of export earnings, leaving them vulnerable to volatile global markets. The 2014 commodity price downturn and the COVID-19 pandemic highlighted these vulnerabilities, severely impacting investment. Gross fixed capital formation - investments in physical assets like infrastructure - fell from 11.4% in 2014 to 4.8% in 2015. The pandemic caused a 4.1% contraction in 2020.

Macroeconomic risks, such as fiscal imbalances, further deter investment. The report calls for macroeconomic stability and fiscal reforms. In 2014, falling commodity prices led to an average fiscal deficit deviation - the gap between actual and planned deficits - of 2% of GDP across Africa. In 2020, pandemic-related spending and revenue losses pushed deficit deviations to 3.4%, underscoring how external shocks strain government revenues.

Vulnerabilities Across Six Areas

The report uses a new multidimensional framework to analyse vulnerabilities across six areas, highlighting how they are interconnected and amplify each other:

Political: Coups, governance challenges and weakened democratic institutions
Economic: High debt, trade imbalances and inflation
Demographic: Rapid population growth and migration pressures
Energy-related: Dependency on fossil fuels and limited renewable infrastructure
Technological: Digital divides and under preparedness for disruptive innovations
Climate-related: Extreme weather and dependence on climate-sensitive agriculture

For example, governance instability worsens economic conditions and deters investment. Since 1950, Africa has seen 220 of the world’s 492 coups attempts. Economic vulnerabilities like high debt levels further undermine stability. In 2023, nearly half of African nations had debt-to-GDP ratios above 60%, with many spending more government revenue on debt interest than on education or health.

Infrastructure gaps in transport, energy, and ICT drive up trade costs 50% above the global average, reducing competitiveness. Less than half of Africans have reliable electricity access. Closing Africa’s energy gap will require $190 billion annually - about 6% of GDP. Between 2002 and 2023, Africa experienced strong economic growth, enhancing its appeal for trade and investment. Climate-related risks, especially in agriculture - a lifeline for millions - further deepen vulnerabilities.

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An estimated 120 million Africans currently face acute food insecurity, 80 percent of whom live in conflict-affected countries. About 464 million people in the region were still living in extreme poverty in 2024. Challenges remain, including high unemployment, persistent debt, and inflation above 10% in several countries.

Intra-African Trade and the AfCFTA

Intra-African trade remains one of the continents greatest opportunities but accounts for only 16% of its total trade. Over 50% of the continent’s imports and exports are tied to just five economies, all outside of Africa. Meanwhile, only 16 of 54 African nations source more than 0.5% of intermediate goods regionally, missing critical opportunities for value-added trade and manufacturing.

Within Africa, a few major economies - Kenya, Nigeria, and South Africa - dominate as suppliers and users of value-added goods, leaving regional production networks vulnerable to disruptions in key markets. Strengthening and diversifying Africa’s trade networks is key to resilience, but infrastructure gaps - especially in transport and electricity - and non-tariff barriers hinder regional supply chains. For example, poor connectivity means road transport accounts for about 29% of the price of goods traded in Africa, compared to 7% for those traded outside the continent.

Likewise, it costs less to trade within African regional blocks - for example, the East African Community - than across them. Technical requirements, inefficient customs processes and other non-tariff barriers restrict African trade three times more than tariffs. Despite these challenges, 61% of Africa’s regional exports consist of processed and semi-processed goods, highlighting opportunities for regional supply chain diversification. The African Continental Free Trade Area (AfCFTA) offers a pathway to reduce dependence on global markets and enhance resilience.

The report calls for reducing non-tariff trade costs, streamlining import and export processes, upgrading infrastructure and diversifying trade partners. Improving the business environment is critical to building resilience in Africa. While the continent offers growing markets and high investment returns, businesses - especially small and medium-sized enterprises (SMEs) - face significant challenges.

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AfCFTA Digital Trade Protocol

In February 2024, a significant development regarding the African Continental Free Trade Area (AfCFTA) with the adoption of the Digital Trade Protocol (AfCFTA DTP) by the State Parties. The AfCFTA DTP, once ratified, will have a profound impact on the digital economy across the African continent.

Increased Cross-Border Disputes: The AfCFTA DTP is likely to facilitate increased trade and investment across African borders.
New Areas of Arbitration: The Protocol's provisions on issues like cross-border data flows, digital payments, and online safety will likely give rise to new areas of arbitration practice.
The Role of Arbitration in AfCFTA Dispute Resolution: The AfCFTA DTP provides for the resolution of disputes between State Parties through the Protocol on Rules and Procedures on the Settlement of Disputes, which consists of Alternative Dispute Resolution mechanisms and arbitration for resolving disputes.

The adoption of the AfCFTA DTP marks a significant milestone in the development of African regional trade law.

Small and Medium-Sized Enterprises (SMEs)

SMEs provide 80% of employment across Africa, but are particularly vulnerable to economic shocks. In 2023, 32% of African firms cited limited access to financial tools as a major obstacle to growth. Currency volatility further strains small businesses reliant on foreign currency transactions. Energy dependency poses another major challenge. Over half of Africa’s energy supply relies on fossil fuels, leaving businesses vulnerable to volatile energy markets and risks during the global energy transition. In 2023, renewable energy investment in Africa totalled just $15 billion - only 2.3% of global renewable energy investment.

To help SMEs seize opportunities and drive economic transformation, African governments need to strengthen regional financial markets and enhance regulatory frameworks. Africa’s economic future depends on addressing vulnerabilities and leveraging opportunities for regional integration and diversification. Improved infrastructure, financial systems and governance are vital to enhancing resilience, boosting intra-African trade and fostering sustainable growth.

Arbitration and Dispute Resolution

2024 marked a period of several significant developments and witnessed some “firsts” for the African arbitration community. Notwithstanding the constantly changing political climate and policies in different countries across the continent, the continued growth of arbitration in Africa remains relentless with exciting events and collaborations as well as judicial, legislative and institutional developments.

The 2024 edition of the biennial SOAS Arbitration in Africa Survey (“Survey”), like the previous editions in 2018, 2020, and 2022, provides empirical insight into the growth and particularities of arbitration in Africa. In comparison to the 2020 Survey, the 2024 Survey showcases the continent’s growing diversity and appeal, revealing a wider range of top arbitration seats: Mauritius, Seychelles, Morocco, Kenya, Nigeria, Malawi, Ivory Coast, Sudan, Botswana, Zambia, Algeria, Uganda, Tanzania, South Africa, Rwanda, and Egypt.

Judicial support for arbitration, the reputation of resident arbitration institutions, and sophisticated arbitration legal frameworks are cited as reasons for the continued preference for arbitration seats in places such as Mauritius, South Africa, Egypt, and Rwanda’s emergence as a player.

In February 2024, the President of the Republic of Malawi gave assent to the International Arbitration Bill previously passed by the Malawi Parliament in 2023. The Bill (now the International Arbitration Act 2024) adopts the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration 2006 and gives effect to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). This development closely follows Malawi’s accession to the New York Convention in 2021 and aligns with the country’s demonstrated intention to ensure the establishment of a seat for international commercial arbitration in Malawi.

There are also plans to reform the arbitration-governance framework in Ghana. Just before the close of the year, Uganda passed into law the Arbitration and Conciliation (Amendment) Act 2024. A major change by the Amendment Act is the integration of the Centre for Arbitration and Dispute Resolution (CADER) into the Ministry of Justice.

Arbitration institutions were not left out in the 2024 series of developments. Notably, the Cairo Regional Centre for International Commercial Arbitration (CRCICA) issued the 2024 Arbitration Rules. The Africa Arbitration Academy embarked on a mission to develop a comprehensive resource for individuals and organizations involved in arbitration across the African continent. This resource is known as the Arbitration Compass, which launched in July 2024. The Arbitration Compass serves as an in-depth guide, covering arbitration practices in 19 African countries and 8 arbitral institutions, with contributions from over 50 experts.

2024 saw a significant development in the long-running dispute surrounding the Mambilla Hydroelectric Power Project in Nigeria. Sunrise Power and Transmission, a company previously awarded the construction contract for the project, escalated its legal action against the Nigerian government by bringing an arbitration under the auspices of the International Chamber of Commerce, International Court of Arbitration in Paris. Sunrise Power, seeking damages of USD 2.3 billion, claimed the government breached its 2003 agreement. Significantly, in 2020, the parties entered into a settlement accord where the government agreed to pay Sunrise Power USD 200 million.

A recent Kenyan case underscores the strong pro-arbitration stance of Kenyan courts. The court upheld an arbitration agreement under the ICC Rules, rejecting the appellant's arguments that the agreement was biased and the ICC process was expensive and slow. The Ugandan High Court has upheld a London Court of International Arbitration (LCIA) award in favour of Great Lakes Energy (GLE) over the Kabulasoke Solar Power Plant dispute.

United Nations Support for Africa

Through its unique capacities as the world’s premier vehicle for international cooperation, the UN system plays a crucial role in the discussion and implementation of solutions at community, national or regional level, particularly in Africa. In this effort, the UN works closely with Africa’s regional cooperation mechanisms and has five active peacekeeping operations at present.

To advance its support for Africa even further, the United Nations Office of the Special Adviser on Africa was established in 2003 to enhance international support for African development and security and to improve coordination of UN system support. It also works to facilitate global deliberations on Africa, particularly with respect to the New Partnership for Africa’s Development (NEPAD) - a strategic framework adopted by African leaders in 2001. In 2018, NEPAD's mandate was reformed and transformed into the African Union Development Agency-NEPAD (AUDA-NEPAD).

Addressing the challenges posed by protracted conflicts and longstanding disputes on the African continent has been a major focus for the UN. Missions have been deployed to conflict-affected regions with the aim of maintaining peace, facilitating political dialogue, and supporting post-conflict reconstruction. In 1960 the first peacekeeping operation in Africa was deployed in the Republic of the Congo to ensure the withdrawal of Belgian forces and to assist the Government in maintaining law and order. Since then, thousands of peacekeepers have been deployed to more than 30 peacekeeping operations in African countries.

Decolonization was largely driven by the efforts of African nations and their leaders, but the UN provided a platform for dialogue, principles of self-determination, and international norms that facilitated the process. The UN established the Trusteeship System to oversee the transition of colonies to independence.

Technological Advancements

How technology is transforming Africa’s healthcare sector

Africa has experienced a rapid increase in mobile phone penetration, with mobile technology serving as a key driver of connectivity and financial inclusion. Several African countries have established digital innovation hubs and technology ecosystems to support startups and entrepreneurs. Various African governments have implemented e-government initiatives to improve service delivery, enhance transparency, and promote citizen engagement. Technological advancements in renewable energy, such as solar power, are prominent. Technology is playing a crucial role in transforming agriculture in Africa.

AI in Africa

Gender Equality and Women Empowerment

Many African countries have made strides in enacting legal reforms to promote gender equality. Efforts have been made to improve access to education for girls. Some progress has been observed in increasing women's political representation. In 16 African countries, women hold close to one-third of the seats in parliaments, according to Women in Politics: 2023. Initiatives to economically empower women have been implemented, including microfinance programmes, entrepreneurship support, and efforts to enhance women's access to financial resources. Africa has the highest regional female entrepreneurial activity rate in the world. Women in Africa have achieved significant milestones in leadership roles across various sectors, including business, academia, and civil society.

Africa's Agenda 2063

In January 2015 the Heads of State and Governments of the African Union adopted Agenda 2063, a strategic framework for the socio-economic transformation of the African continent. The key priorities include:

Domestic resource mobilization will define our future.
Infrastructure is the new independence.
Tech must solve real problems.
Agriculture remains Africa’s goldmine. Wealth is in processing, storage, logistics, and export.
Human capital is our greatest export and investment.
Purpose and profit must coexist. This is not CSR. It’s about legacy, building to last, and creating systems for generations beyond us.
Climate resilience is essential - but not at the expense of energy access. Africa cannot trade immediate power access for sustainability.
Diaspora financing is Africa’s hidden advantage. Nearly $95 billion flowed from the diaspora to Africa, mostly for consumption. Imagine the impact if even a portion were directed to productive sectors like agriculture, tech, and infrastructure.
Adaptive leadership will outpace inherited models.

Key Data and Statistics

Indicator	Value
Projected Growth in SSA (2024)	3.3%
Projected Growth in SSA (2025)	3.5%
Projected Growth in SSA (2026-27)	4.3%
Africans Facing Acute Food Insecurity	120 million
People Living in Extreme Poverty (2024)	464 million
Intra-African Trade	16% of total trade