By: Nghiinomenwa-vali Hangala
Despite a number of ambitions, current economic conditions across many African countries are still rooted in raw material export.
According to the Afrixembank’s Trade & Development Finance Brief Issue 1, 2026, manufacturing value added as a share of the continent’s Gross Domestic Product (GDP) remains below 10 percent.
The lowest among developing regions.
While intra-African trade accounts for only 15-17 percent of total trade.
The import and export bank has noted that critical infrastructure necessary for industrialisation—such as reliable energy supply, road networks, and rail transportation systems—remains weak or underdeveloped in the continent.
“The continent has remained at the periphery of world trade with its trade accounting
for just a paltry 3 percent of total global trade,” the bank wrote.
African export data shows that its export basket is dominated by natural resources (oil, gas, and minerals) and agricultural products, while imports consist largely of manufactured goods and machinery, the Brief detailed.
This is true for Namibia where its top 5 exports remain dominated by minerals, with only fish as a non-mineral. Monthly trade data shows this has been the trend for years.
“This dependence on natural resources and commodity exports has contributed to
undue exposure and vulnerability of African economies to external shocks,” the bank stated.
The import and export bank has noted that while some progress has been made in processing natural resources, leading to higher product value and a stronger position in international markets, a significant share of exports remains in raw form.
The bank says this dependence exposes African economies to price fluctuations and external shocks, which discourages long-term investment in higher-value industries and hinders sustainable growth.
Pointing out that despite generally promising outlook, several structural constraints continue to hinder trade and investment.
Chief among these is inadequate infrastructure, the bank analysis stated.
Africa faces an annual infrastructure financing gap of approximately US$100 billion, with deficiencies in energy, transportation, and communication networks hampering trade logistics and increasing the cost of doing business.
Inadequate port facilities, poor road networks, and unreliable electricity supply remain major impediments to investment, the Brief revealed.
According to the Africa Finance Corporation 2024 report on Africa’s infrastructure, 13 sub-Saharan African countries lack operational rail networks, and roughly half of these countries are landlocked.
Access to water also remains below 60 percent.
“These infrastructure gaps undermine structural transformation and the expansion of cross-border trade,” the bank stated.
Adding that the infrastructure gaps make building specialisations in specific goods and services more challenging, making the continent less competitive and attractive for investment.
The bank has also indicated that it is not only inadequate infrastructure that is slowing the continent’s progress, but institutional challenges further complicate Africa’s trade and investment landscape.
These are weak governance structures, and underdeveloped legal frameworks serving as impediments to investors from fully engaging in African markets.
Regulatory barriers, including inconsistent and incoherent policy implementation, bureaucratic inefficiencies, and a lack of transparency have complicated trade and investment processes – contributing to delays and higher transaction costs.
Political instability, manifested in conflicts and government overthrows in some countries, has led to economic uncertainty and poor governance, weakening investor confidence.
The bank has also highlighted that many African enterprises are also struggling to secure the capital needed for growth due to underdeveloped financial markets, high interest rates, and a lack of venture capital.
“Financial constraints are cited as a key obstacle to participation in export trade,” stated the report.
High borrowing costs and strict collateral requirements limit the enterprises’ ability to expand.
Similarly, startups often face difficulty attracting investment due to perceived market risks.
These constraints stifle innovation and economic diversification, while limiting the ability of small and medium enterprises to compete internationally, the bank noted.
Addressing these gaps will be essential to increasing financing and unlocking Africa’s full trade and investment potential, the report read.
In response, initiatives, including the launch of the historic African Continental Free Trade Area (AfCFTA), have focused on diversifying Africa’s trade base through policies that support industrialisation and development of regional value chains.
Similarly, the African Union’s Agenda 2063 aims to transform the continent through industrialisation, infrastructure and modernisation, and increasing regional trade to at least 50 percent of the continent’s total trade by 2063.
The AfCFTA is widely regarded as a game-changer with the potential to integrate small, fragmented markets across the continent and strengthen regional economic linkages to boost intra-African trade and productivity.
erastus@thevillager.com.na
