Expanding into the African market offers great potential for businesses. With a population of over 1.4 billion people (according to United Nations estimates), it is one of the world’s fastest-growing markets and has a rapidly expanding middle class.
The African continent is made up of over 1,000 ethnic groups and over 2,000 languages. The history of Africa is long and complex, with the earliest known civilizations in the Nile Valley, including ancient Egypt, dating back to around 5000 BCE. Over time, various kingdoms, empires, and colonial powers have risen and fallen. Today, Africa is home to several growing economies and is increasingly seen as a destination for investment and trade.
In terms of language, many African countries have official languages, such as English, French, and Portuguese, as a result of colonial rule. However, indigenous African languages continue to be widely spoken and play an important role in preserving cultural identity.
Africa is home to a number of emerging industries with great potential for growth. The growth of mobile technology and internet access has been a key driver in this sector. Africa’s health sector is worth $66 billion per year. This is according to the United Nations Economic Commission for Africa. However, a large portion of Africa has thus far been excluded from the energy transition. In the last two decades, Africa received only 2% of global investments in renewable energy, with significant regional disparities. Africa accounts for less than 3% of global renewables jobs.
Expanding into Africa can assist businesses in diversifying their operations. The African continent is a land of opportunity for businesses seeking to expand their operations. When it comes to navigating the African market, companies have a plethora of options, from understanding the region’s cultural nuances to tapping into its vast natural resources. To be successful in this venture, businesses must have a thorough understanding of the local language, culture, and customs.
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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.
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. 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. 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.
Africa can also lay the groundwork for more inclusive growth by investing in its people. Over the next three decades, the region will experience the fastest increase in working-age population of any region, with a net increase of about 740 million people by 2050. Up to 12 million youth will enter the labor market each year, yet only about 3 million new formal wage jobs are currently created annually.
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South Africa: An Economic Powerhouse
South Africa is the most advanced, diversified, and productive economy in Africa. The country has a population of over 60 million, covers 1.22 million square kilometers, and is the world’s largest producer of platinum, vanadium, chromium, and manganese.
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The Gross Domestic Product (GDP) amounted to $ 405.87 billion in 2022, with the economy expanding by 2%, (GDP US $ values are not purchase power parity adjusted). Nigeria has overtaken South Africa as the largest economy in Africa.
Key sectors of the South African economy include:
- Services (around 73% of GDP)
- Finance, real estate, and business services (21.6%)
- Government services (17%)
- Wholesale, retail and motor trade, catering and accommodation (15%)
- Transport, storage and communication (9.3%)
- Manufacturing (13.9%)
- Mining and quarrying (around 8.3%)
- Agriculture (2.6%)
Parts of the country’s urban areas boast well-developed infrastructure, comparable to OECD standards, but rapid urbanization has led to glaring contrasts. The growing services sector is a major employer, and the corporate side of the economy has been traditionally well-managed, although it faces low productivity gains. The banking and financial services sector is stable. The Johannesburg Stock Exchange (JSE) ranks among the top emerging market exchanges in the world.
South Africa is well integrated into the regional economic infrastructure as formalized by membership in the Southern African Development Community (SADC). In addition, the Southern African Customs Union (SACU) agreement with Botswana, Namibia, Lesotho, and eSwatini (Swaziland) facilitates commercial exchanges. South Africa is a member of the World Trade Organization (WTO), the G20, and the informal BRICS (Brazil, Russia, India, China, and South Africa) association of emerging economies.
Trade Relationships and Agreements
The United States is a critical trading and technology partner for South Africa and ranks as South Africa’s third-largest bilateral partner in two-way trade by value. The United States and South Africa signed a Trade and Investment Framework Agreement (TIFA) in 2012. The United States and SACU concluded a Trade, Investment, and Development Cooperation Agreement (TIDCA) in 2008.
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The total goods trade with Africa were an estimated $72.0 billion in 2024. Goods exports to Africa in 2024 were $32.4 billion, up 12.9 percent ($3.7 billion) from 2023. Goods imports from Africa in 2024 totaled $39.6 billion, up 2.7 percent ($1.0 billion) from 2023. The total services trade (exports plus imports) with Africa totaled an estimated $32.9 billion in 2024. Services exports to the Africa in 2024 were $19.2 billion, up 11.4 percent ($2.0 billion) from 2023. Services imports from Africa in 2024 were $13.7 billion, up 9.9 percent ($1.2 billion) from 2023.
The total goods trade with the Sub-Saharan Africa totaled an estimated $48.8 billion in 2024. Goods exports to the Sub-Saharan Africa in 2024 were $18.7 billion, up 3.0 percent ($545 million) from 2023. Goods imports from the Sub-Saharan Africa in 2024 totaled $30.1 billion, up 3.6 percent ($1.0 billion) from 2023.
New-to-market (NTM) companies should consider South Africa’s geographic advantages, infrastructure, widespread use of the English language, and relatively transparent legal processes, which make it a low-entry threshold country.
By providing duty-free entry into the United States for almost all African products, AGOA has helped expand and diversify African exports to the United States, while at the same time fostering an improved business environment in many African countries through the application of eligibility requirements. Congress extended AGOA through 2025.
Challenges and Vulnerabilities
Cascading global crises, including COVID-19 and the war in Ukraine, has hit African economies hard. Reliance on foreign markets, volatile commodity exports, high debt and weak infrastructure have deepened the continent’s vulnerabilities.
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.
Energy insecurity compounds risks. Less than half of Africans have reliable electricity access. Closing Africa’s energy gap will require $190 billion annually - about 6% of GDP.
Climate-related risks, especially in agriculture - a lifeline for millions - further deepen vulnerabilities. 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%.
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.
Macroeconomic risks, such as fiscal imbalances, further deter investment. 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.
The report calls for macroeconomic stability and fiscal reforms.
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.
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.
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.
However, countries like Botswana, Cabo Verde, Mauritius, Morocco, and South Africa show that resilience can be strengthened in Africa through stronger regulatory environments, connectivity, economic diversification and political stability.
Also, the 2023 adoption of the AfCFTA Protocol on Investment has created new opportunities for intra-African investment. That year, African investors financed 20% of international projects in services and manufacturing and 13% in resource-based industries.
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.
Table: Key Economic Indicators for Africa (2024 Estimates)
| Indicator | Value |
|---|---|
| Goods Trade with Africa | $72.0 Billion |
| Goods Exports to Africa | $32.4 Billion |
| Goods Imports from Africa | $39.6 Billion |
| Services Trade with Africa | $32.9 Billion |
| Services Exports to Africa | $19.2 Billion |
| Services Imports from Africa | $13.7 Billion |
GDP per capita in Africa
