The African Continental Free Trade Area (AfCFTA) has brought attention to the benefits of increasing intra-African trade, currently at 16%-17%. Africa's economic integration aims to boost growth, jobs, and shared prosperity for its 1.5 billion-strong population. To drive intra-African trade, African governments are focusing on enabling visa-free travel and connected payment systems. According to the Africa Prosperity Network (APN), these two measures can increase intra-African trade to over 25% within five years.
Ghana's President, John Dramani Mahama, recently called for local-currency trade settlements, integrated digital payments, and greater local processing of Africa's mineral and agricultural resources. His statement aligns with the priorities of producing more value in Africa and making it easier to trade that value across the continent. The APN welcomes this call, emphasizing that Africa's single market must make it more rewarding to produce, invest, and trade. Removing visa restrictions and connecting payment systems are essential, but easier movement and payments will achieve more if businesses can access affordable finance.
A significant challenge in many African economies is that financing government can be more rewarding than financing enterprise. When governments borrow heavily at high interest rates, banks and investors earn attractive returns from Treasury bills and bonds, with fewer operational demands than investing in production. This creates a damaging incentive, as manufacturers and agribusinesses struggle to attract capital or borrow from banks when government securities offer compelling returns. High nominal yields do not necessarily mean high real returns, as inflation and currency depreciation can erode them.
The problem arises when persistent deficits absorb scarce savings and push up borrowing costs for businesses. The experience of America serves as a warning, where the relative decline in manufacturing dominance is attributed partly to financialisation. The growing influence of financial returns and shareholder valuations over business decisions can take precedence over expanding productive capacity. In Africa, the danger is that financing government becomes more rewarding than financing enterprise, while in America, it is that maximising financial valuations becomes more important than expanding productive capacity.
Africa has yet to industrialise at the scale its population demands, and it cannot afford to starve production of capital. Affordable finance belongs at the heart of Africa's integration agenda. A functioning single market serving 1.5 billion people would strengthen the commercial case for factories, agricultural processing, and regional supply chains. However, market access alone cannot finance machinery or fulfil an order. The Africa Prosperity Network welcomes the Africa Credit Rating Agency, which will help institutionalise and tackle the issue of how African risks are assessed and how productive investment can secure affordable finance.
Integration and sound economic management must advance together. Low, stable inflation makes long-term investment easier to plan, while credible public finances and sustainable government borrowing reduce competition for scarce savings. Reliable electricity, predictable taxation, and enforceable contracts improve the prospects of productive enterprise. The Africa Prosperity Network, with the support of its partners, is focusing on achieving two quick wins: cross-border digital payments interoperability and visa-free travel.
President Mahama's call at the Russia-Africa Summit speaks directly to the challenge of making African enterprise more competitive and rewarding. His anticipated African Union chairmanship in 2027, coinciding with Ghana's 70th independence anniversary, would offer an opportunity to rally fellow leaders behind this practical economic Pan-Africanism. The Africa Prosperity Dialogues 2027 provides a timely platform to translate that ambition into proposals for action, with the theme "The Borderless Africa We Want: Move Freely. Pay Seamlessly. Trade More."
Key points
- Affordable finance is crucial for African enterprises to compete and grow.
- Integration and sound economic management must advance together to achieve Africa's economic goals.
- Cross-border digital payments interoperability and visa-free travel can increase intra-African trade.
