For the past several years, Canada has made trade diversification a key priority. In its 2018 Fall Economic Statement, the federal government committed to making Canada a more globally connected economy by increasing overseas exports by 50 per cent by 2025.

The opportunity for Canada in Africa is enormous. Economic analysis commissioned by the Business Council of Canada suggests that if Canada seized the opportunities in Africa our exports to the region could reach USD 6.6 billion in 2030, representing a growth potential of about USD 4.1 billion over the coming decade.

While growth varies across the continent, Africa is home to six of the 10 fastest growing economies in the world. This does not mean that the picture is entirely pink. In fact, three of Africa's largest economies, South Africa, Nigeria and Angola, are experiencing severe and unique economic challenges that are holding back continental growth. Despite these challenges, the continent continues to grow at a rate of 3.6%. Not only is this rate faster than the global average, but many economists expect Africa's growth to accelerate in the coming years.

Africa's relatively young and rapidly growing population is expected to help support and sustain growth for the foreseeable future. This contrasts with many parts of the advanced and developing world that are experiencing or will experience an aging population and shrinking workforce. Africa's working-age population is expected to increase from 700 million today to one billion by 2030. Over the same period, the total population will increase from 1.2 billion to 1.7 billion.

As the population grows, so too will the number of middle-class Africans. By 2030, 212 million sub-Saharan Africans will be part of the middle class, an 86 per cent increase from 2015. The McKinsey Global Institute projects that household consumption will grow from $1.4 trillion in 2015 to $2 trillion in 2025. While much of this total consumption will come from the wealthiest households ($50,000 annual income), many Africans will become emerging consumers or global consumers, earning between USD 5,000 and 50,000 per year. These consumers are able to spend beyond their basic needs.

Image credit © by africanxpansionmag, Canada-Africa Trade: A platform for prosperity.

For this development to be possible, it is expected that more Africans will move to cities where there are more, productive and better paying jobs. Nearly 200 million new urban residents are expected by 2025. At that time, Africa is expected to be the fastest urbanizing region in the world, and by 2045 it will have a larger urban population than China or India. The rate and extent of urbanization will be transformative and could make African consumers more connected to the global market.

Furthermore, if successfully implemented, the recent ratification of the African Continental Free Trade Agreement (AfCFTA) has the potential to boost intra-African trade and facilitate exporters' access to the African market. This can only be achieved with significant new investment in regional infrastructure, the establishment of a common external tariff, deeper economic harmonization and the entry into formal cross-border trade of thousands of African businesses that will become potential partners for international suppliers of production inputs and business services.

A study by Ciuriak Consulting on Canada's trade performance with Africa reveals that although African growth has accelerated significantly, Canada is falling behind other competitors in the market. Steady growth over the past two decades has allowed the economy of Sub-Saharan Africa (SSA) to approach $4.8 trillion in purchasing power parity terms. If the Maghrebian economies of North Africa are added, this figure rises to 7.5 trillion US dollars. This growth has caught the attention of the world's largest economies:

·       The European Union has negotiated Economic Partnership Agreements with African countries; 

• China is heavily invested in the region through its Belt and Road Initiative; 

• The United States has the Prosper Africa project, which is a reaction to the expansion of China’s relationship with Africa; 

In October 2019, Russia organized a summit with African leaders in Sochi. 

Canada should continue to build and strengthen its relationship with the African continent, taking into particular consideration that:

·       Canada has earned a high level of trust in many African countries. What is missing is a coordinated approach with stakeholders to develop and execute a common economic and development strategy.

·       Canada has played an important role in providing technical assistance to the AfCFTA. Given this history and its expertise in trade negotiations, Canada must continue to provide technical support to help the AfCFTA reach its full potential. This has the added benefit of putting Canada first in line to negotiate a trade deal with the AfCFTA if a customs union is achieved.

·       Canadian business and political leaders must establish consistent high-level visits and engagement to develop a serious Africa strategy.

·       Canadian business and government must develop long-term plans for Africa and commit to the market for at least a decade.

For Canada to play an important role in Africa's development, coordinated action by the Canadian government and the Canadian industrial cluster is essential!

Image credit © by reseausoutien.org, Launch of SACII2022.

Canada needs a comprehensive strategy for Africa. The opportunities in Africa are simply too great to ignore. Greater commercial engagement will not be enough on its own. Coordinated actions by government and business will be needed if Canada is to play a greater role in Africa's development.

For all African economies, Canada's exports to the region could reach USD 5.3 billion in 2025 (according to a study by Ciuriak Consulting). This represents a growth potential of approximately USD 2.8 billion over the next half-decade. For all African economies combined, Canada's exports to the region could reach $6.6 billion in 2030. This is a growth potential of about $4.1 billion over the next half-decade.

By neglecting its economic relationship with Africa, Canada is missing an important opportunity to expand its trade with one of the most promising emerging markets in the world. The combination of strong economic growth and expanding trade in the region due to the AfCFTA, new trade infrastructure and the rapid spread of e-commerce is creating major and significant opportunities for Canadian businesses.