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The 2025 edition of the Africa Trade Report, titled “African Trade in a Changing Global Financial Architecture,” warns that a surge in global trade protectionism and financial market volatility is reshaping the economic landscape, with serious implications for Africa’s development prospects.
According to the report, a global wave of tariffs and subsidies—spearheaded by the administration of U.S. President Donald Trump—has triggered heightened risk aversion, market losses, and liquidity constraints.
Equity markets shed nearly US$10 trillion following the first wave of U.S. tariff announcements, while volatility indices remain elevated, reflecting deep investor unease.
Read more: Afreximbank warns of $100 billion trade finance gap hindering intra-African trade growth
“Protectionist trade policies have now spilled over into global finance,” the report notes, highlighting how a weaker U.S. dollar and elevated interest rates are tightening liquidity conditions, particularly for African economies already grappling with twin deficits, low reserves, and large development finance gaps.
Amid the turmoil, global output is forecast to slow from 3.3 percent in 2024 to 2.8 percent in 2025, significantly below the 2000–2019 average of 3.7 percent.
The report attributes this deceleration largely to escalating trade tensions and diminished multilateral cooperation.
The International Monetary Fund (IMF) estimates that the U.S. effective tariff rate has jumped to 14.5 percent, the highest in nearly a century.
Despite the difficult global backdrop, Africa’s economy grew by 3.2 percent in 2024, buoyed by public investment, strong commodity prices—especially in gold, cocoa, and coffee—and early success in economic diversification.
However, the continent’s growth remains uneven, with resource-dependent countries experiencing more volatility.
Encouragingly, fiscal reforms have led to improved macroeconomic stability across the continent.
Debt levels have declined in several countries, and eight African nations regained sovereign access to international capital markets in 2024.
At the same time, Africa’s merchandise trade rebounded strongly, growing by 13.9 percent to US$1.5 trillion, reversing a 5.4 percent contraction in 2023. Intra-African trade also saw a notable rebound of 12.4 percent to US$220.3 billion, underpinned by continued implementation of the African Continental Free Trade Area (AfCFTA).
“Africa finds itself at a critical juncture,” said Dr. Yemi Kale, Group Chief Economist at Afreximbank.
Kale stated that: “The fragmentation of global financial and trade systems presents serious risks—but also real opportunities for the continent to reconfigure its trade partnerships, deepen regional value chains, and build greater economic resilience through the African Continental Free Trade Area.”
He added: “To unlock this potential, we must address the structural barriers to trade—particularly the financing constraints facing small and medium enterprises—and invest in integrated infrastructure that links production to markets across the continent.”
The report positions AfCFTA as a critical tool for trade resilience, with the potential to reduce dependence on external markets and mitigate exposure to commodity shocks.
Nevertheless, intra-African trade still accounts for only 14.4 percent of formal trade, and Africa’s global export share has declined slightly from 3.5 percent in 2009 to 3.3 percent in 2024.
Africa’s economic outlook for 2025 remains cautiously optimistic, but the report emphasizes the need for greater financial coordination, deeper regional integration, and enhanced support for export-oriented SMEs.
Without structural reforms and collaborative solutions to Africa’s finance gaps, risk-averse global markets could starve the continent of the capital needed to build a resilient, inclusive economy, according to the report.
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