A Competitive Africa

A Competitive Africa Economic integration could make the continent a global player

Hippolyte Fofack

Africa ranks near the bottom when it comes to competing in the global economy, held back by fragmented markets that inhibit efficiency and constrain economic growth.

Now a new player is emerging with the potential to defragment Africa and boost the productivity of its economies: the African Continental Free Trade Area (AfCFTA). In March 2018, 44 African heads of state signed a framework to establish a single continental market for goods and services, with free movement of capital and business travelers. Five additional countries, including South Africa, joined in July. The AfCFTA still needs ratification by the parliaments of at least 22 countries; seven have done so thus far.

In addition to increasing market efficiency and reducing the cost of doing business by offering opportunities for economies of scale, the AfCFTA could ease trade and investment flows and shift the composition and direction of foreign direct investment flows into Africa.

The big question is whether this effort will also elevate the competitiveness of African economies. Competitiveness—the set of institutions, policies, and factors driving productivity—is a key determinant of sustainable growth and provides a path for effective integration into the global economy.

The Global Competitiveness Index, a performance indicator generated every year by the World Economic Forum to benchmark countries, shows large variations in national competitiveness rankings. These have to do with the stage of economic development, the gap in physical and technological infrastructure between developed and many developing economies, and the inability of a number of developing economies to undertake the critical economic and institutional reforms needed to raise their...