Why Africa's free trade deal is a game-changer for sustainable growth
As the World Bank meets in Washington D.C., Afreximbank’s eighth Babacar Ndiaye Lecture underscores Africa’s potential to balance economic growth with climate action.
A new platform
When Afreximbank launched its Babacar Ndiaye Lecture in 2017, it aimed to create a new platform for Africa that would inspire meaningful dialogue on the continent’s future. Eight years later, the annual lecture, held during the World Bank-IMF Annual Meetings, brings together policymakers, financial experts, and climate advocates to explore solutions to Africa’s most pressing challenges.
This year’s lecture highlighted the concept of balance – asking how Africa’s leaders can address urgent development needs while also safeguarding the future of the planet.
Throughout the lecture and in discussions that followed, the African Continental Free Trade Area (AfCFTA) emerged as a promising route for addressing these competing demands. This agreement, alongside Afreximbank’s support, now presents the continent with a clear path toward inclusive, sustainable prosperity.
Resolving the growth dilemma
The headline speaker at this year’s Babacar Ndiaye Lecture was Professor Yemi Osinbajo, former Vice-President of Nigeria, who presented a new vision for Africa’s sustainable development. Throughout his speech - Saving Lives Today versus Saving the Planet - Osinbajo challenged African leaders to embrace the concept of climate-positive economic growth
“The AfCFTA empowers African countries to first add value to materials and specialize in areas of national comparative advantage while also working together to trade more beneficially with the rest of the world.”
Professor Yemi Osinbajo Former Vice-President of Nigeria
With an introduction by Afreximbank President Professor Benedict Oramah, Osinbajo stressed that the continent’s continued development hinges on the success of cross-national initiatives that advance both economic and environmental goals. In his view, one cannot be achieved without the other.
Chief among these initiatives is the AfCFTA. Established in 2021, the landmark agreement created the largest free trade area in the world, connecting 1.3 billion people with the potential to lift 30 million of them out of extreme poverty. Competitive and ambitious, it has been widely hailed as a catalyst for the structural investment, trade, and job reforms the continent requires.
“The AfCFTA empowers African countries to first add value to materials and specialize in areas of national comparative advantage,” said Osinbajo, “while also working together to trade more beneficially with the rest of the world.”
Beyond economic growth
For Osinbajo, the AfCFTA provides an answer to the long-standing question of how Africa can achieve the sometimes elusive goal of sustainable growth. This sentiment was echoed by Professor Oramah, who cited the AfCFTA as “a pathway to a just transition, which enables local industrial value addition.”
“We had to take care of ourselves because the thinking was that the existing international financial architecture had failed the continent”
Professor Benedict Oramah President of Afreximbank
Afreximbank has long championed the AfCFTA as a means of pan-African economic integration. Its AfCFTA Support Strategies assist companies and governments across the continent in developing approaches to maximize the opportunities provided by the agreement. This aligns with the bank’s vision for a global Africa - a continent that engages in the world economy on its own terms.
“We had to take care of ourselves,” said Oramah, “because the thinking was that the existing international financial architecture had failed the continent.”
But the AfCFTA’s impact goes beyond economic growth. It’s also an opportunity for African countries to advance climate-positive trade practice and onshore manufacturing processes.
“There are two obvious advantages to a fully operational AfCFTA,” Osinbajo explained. “The first is that African countries gain jobs and revenue from local processing. The second is that intra-African trade in finished goods will substantially reduce a major source of global emissions.”
Embedding change
Alongside the lecture, Afreximbank used the World Bank-IMF platform to outline how its own initiatives are expanding the impact of the AfCFTA.
The bank’s African Carbon Markets Initiative (ACMI) creates carbon credit opportunities across the continent, merging critical economic and environmental considerations in the agreement. Through ACMI, countries can generate and sell carbon credits, offsetting emissions while generating revenue for their economies.
“African nations can fuel industrialization sustainably, reduce reliance on fossil fuels, and attract global investment.”
Professor Yemi Osinbajo Former Vice-President of Nigeria
“If Africa can leverage its vast renewable energy potential… then the continent can become hydrogen superpowers in a very short time,” said Osinbajo. “By tapping into renewable energy, African nations can fuel industrialization sustainably, reduce reliance on fossil fuels, and attract global investment.”
Meanwhile, the bank’s Climate Change Adaptation Finance Facility (CAFF) provides targeted financing for infrastructure projects that mitigate climate change effects. CAFF supports climate adaptation across different sectors, such as in Kenya, where investment is being made so the agriculture and water management industry can withstand the perils of an unpredictable environment.
In a world where sustainability is often pitted against economic growth, the 2024 Babacar Ndiaye Lecture presents a new vision for how Africa can confront its most pressing issues. And with Afreximbank’s leadership driving climate-positive growth, initiatives like the AfCFTA paint a picture of a continent moving toward a more prosperous and secure future.
In a world where sustainability is often pitted against economic growth, the 2024 Babacar Ndiaye Lecture presents a new vision for how Africa can confront its most pressing issues. And with Afreximbank’s leadership driving climate-positive growth, initiatives like the AfCFTA paint a picture of a continent moving toward a more prosperous and secure future.
