Pragmatic policies key to accelerating Africa’s growth

Despite decades of promise, Africa has struggled to sustain rapid, inclusive growth – but demographic shifts and the African Continental Free Trade Area (AfCFTA) may offer a real turning point. However, given the increasing interest in the continent’s resources, its youth-heavy demography and the rolling out of the AfCFTA as the world’s largest single market, the time seems right for the continent to ride the momentum and finally embark on a period of accelerated growth. Translating this potential into reality will, however, require regional regulatory harmonisation, improved capital mobilisation and high-level cross-border collaboration. 

A better-coordinated and pragmatic approach is essential to translate Africa’s demographic and resource advantages into faster, more inclusive growth.

Participants at the roundtable, from both the private sector and a number of African public institutions, agreed that the private sector is a vital actor in the continent’s development story and that it has shown itself more than willing to step up into this role.  

As an example of the role that the private sector can play, the roundtable heard excerpts from a new study by The Coca-Cola Africa system which was released during the US-Africa Business Summit.

In 2024, the Coca-Cola system generated, through its value chain, $10.4bn in economic activity across 54 African markets, supporting over one million jobs, whilst sourcing 83% of its procurement from local suppliers and local value chains. In sum, the impact of the Coca-Cola system on local economies is an example of how international brands and local players can have a deeply positive impact on local economic activity.

What the private sector needs is “predictable policy frameworks that are locally relevant, evidence-based, and promote trade and investment,” added an expert in the field with global experience. In this context, the AfCFTA can play a “transformative role in building those resilient ecosystems that can unlock opportunities for job creation and growth and supply chains”. 

A favourable business environment

Discussing the importance of tax policy not, the head of an international non-profit organisation argued that to achieve higher tax returns, it was first necessary to grow the economy. “Investment leads to employment and those two bring revenue. It is only then that you have money to spend on development,” he argued. With its demographic and economic indicators pointing in the right direction, Africa is well positioned to benefit from such a virtuous cycle. But it needs to be smart with reform and policy and avoid counterproductive measures.

Additionally, it is critical to make the payment and collection of taxes simple to avoid abuse. Digitalisation provides a unique opportunity to improve compliance, reduce leakages and formalise economies to expand financial inclusion.  

It was suggested that to improve business environments, governments should, instead of competing on rates, work on cutting red tape and, for example, “the time it takes to permit for a new factory to be built”. 

The United Arab Emirates is “an example of a country that has managed to achieve this by rating its ministers on how effectively they reduce bureaucratic processes,” it was said. The South African Revenue Service was also commended for moving towards a more cooperative approach that is yielding better results.

Morocco is also considered a success story in this regard, having developed a very strong industrial base, especially in the automotive and aeronautics sectors.  Many of its companies have been expanding beyond its borders, mainly towards West Africa. 

But while considerable progress was being made in terms of cross-border trade, the volume of intra-Africa trade remains perilously low, with only 15% of trade on the continent conducted with other African countries, compared to 58% in Europe and 68% in Asia. “Africa has to trust Africa,” and African companies must be incentivised to trade more with one another, another panellist urged. 

Increasing regional trade will also require integrating small and medium sized enterprises int o regional ecosystems, along with efforts to promote “Made in Africa” goods, boost manufacturing and fix broken logistics systems. 

It was also noted that Morocco’s success is the result of empowering the private sector through reforms, trust and a true partnership between the public and private sectors, where they work and listen to each other’s concerns. 

A participant representing the private sector in the aviation industry echoed this sentiment, calling for greater communication within and between African countries to build trust, share best practices and align on development goals. “That is one of the things that we need in order to accelerate and grow in Africa,” he said. 

The importance of public-private partnerships that can have real-world impact was heavily stressed. This trust still needs to be strengthened. 

Small and medium-sized enterprises are critical to local supply chains and creating jobs, which is why the US Eximbank, for example, supported small businesses with $1.7bn in 2024, out of a total of $7bn in transactions that year. 

A senior advisor on investments noted that governments often regard the announcement of a major investment as the final step, whereas for investors it is only the beginning. Governments also have to recognise that testimonials from fellow investors are more powerful persuaders than official assurances. “Investors don’t listen to you. They listen to each other,” he pointed out.

Not all growth is good growth 

The African head of a US-based think tank argued that “We also need to care about the quality of growth, because the continent needs rapid, sustained, and broad-based growth. This is important for the bottom line of the private sector. It’s also important for governments and social and political stability.”

To achieve this, there must be targeted investment in “tradable sectors” such as agriculture and manufacturing, that can support value chains and job creation, in contrast to fast-growing but less job-intensive sectors like telecoms and services. 

To insure against the coming headwinds, she called for expanded access to international markets, cautioning that rising global protectionism could potentially undermine Africa’s trade prospects.

The head of a regional economic community noted that “it is the private sector that can really establish a common market.” The lack of harmonisation of laws and regulations across member states remains a key obstacle which reduces cross-border investment and trade. In response, regional leaders have adopted a roadmap for legal and procedural harmonisation, with a deadline set for July 2026. 

For the continent to achieve its goals, said the head of an energy company, “African business environments must be very competitive. A stable and predictable business environment is essential.” 

Key takeaways

The roundtable, bringing together leaders from various sectors in Africa and complemented by foreign-based organisation heads, was an intense examination of the continent’s major advantages and why it has so far not succeeded in maintaining sustained growth and development. 

Following evidence-based analysis, several solutions were suggested, including establishing predictable and transparent regulatory frameworks, competitive tax regimes and more robust public-private partnerships to unlock long-term investment. 

Panellists stressed that economic growth must also be inclusive, create meaningful employment and reduce poverty to maintain social equilibrium. 

There was consensus among panellists that improving governance and tax administration, enhancing regional integration and harmonising regulations are key to the success of the AfCFTA as well as the realisation of the continent’s broader economic objectives.

The discussions were held under the Chatham House Rule, so participants are free to use the information received, but neither the identity nor the affiliation of the speakers may be revealed.