An African Free-Trade Area and Growing Middle East-Africa Ties Are Key to Prosperity 

Afshin Molavi

AFP photo: Pius Utomi Ekpei

If you want to understand our collective future, look no further than Africa. Let’s start with the obvious, Africa’s demographics. According to UN projections, Africa’s population is set to double by 2050 to 2.4 billion. Looking further ahead to the year 2100, Africa’s population is expected to hit 4.3 billion. By that time, some one-third of all of humanity will live on the continent. Amid all the talk of the 21st century being the Asian Century, Africa is on pace to nearly catch up with Asia by the end of the century. Could the 22nd century be the African Century?

But before we go that far, let’s look at one of the biggest challenges facing Africa today and in the near future: jobs. When Africa hits 2.4 billion people, some one-third will be youth, according to the African Development Bank. That means 800 million new jobs will be needed.

The African Development Bank referred to the continent’s population growth over the next three decades as a “ticking time bomb.” That’s why the new African Continental Free Trade Agreement (AfCFTA) is so important. Signed by virtually every African nation, it came into force on May 30, and creates the world’s largest free-trade area since the establishment of the World Trade Organization in 1995. Foreign investors often complain about the lack of intra-African trade, making investments in smaller countries a harder sell. Nigeria (population nearly 200 million) is interesting; Niger (population just north of 20 million), not so much.

The AfCFTA is a good start, but don’t expect a revolution overnight. Tremendous obstacles remain and free-trade agreements of this size and scope among predominantly developing countries will require years, even decades, to mature into something broadly accepted, workable and beneficial. But amid the current caricature negative depictions of globalization rising in parts of Europe and the United States, the AfCFTA is a powerful counter-current – and a much needed one.

Today, the median age in Africa is 20. By contrast, the median age in the advanced economies of Europe, the US and Japan is 42. With such a young population, the UN estimates that African countries will need to create 18 million jobs a year through the year 2035.

Where will these jobs come from? In the age of manufacturing automation, low- and semi-skilled jobs are moving to robots. Compounding the problem across Africa, at least for the short term, is the ongoing US-China trade war, which has the potential to knock both countries back a peg. Given China’s vital role as a major importer of African commodities and investor in infrastructure, and America’s role as a major foreign direct investor, the trade dispute will have a knock-on effect.

But there is, of course, another side of the Africa story. This is the story of economic transformation, of young entrepreneurs creating and innovating, of large enterprises going regional and sometimes global and of growing middle classes driving a consumer boom in major cities. The “Africa Rising” narrative may have gotten ahead of itself, though perhaps it served a useful correction to the “hopeless continent” narrative of the Economist magazine cover story from 2000. Today, however, it’s time to stop worrying about the narratives and start getting down to business – yes, business. While aid plays a role, what major African countries need – just like any other country – is private sector-led growth.

Here is where cities like Dubai and Abu Dhabi, and countries like Saudi Arabia, Turkey, Egypt and Morocco come in. One of the defining features of our era today is the massive growth in South-South trade and investment. Countries across the “global South” are no longer waiting for the West to “save” them with aid or to invest in their markets; instead, they are increasingly also engaged with other emerging markets.

Dubai has become something of a Miami for Africa, a major hub for African business, trade, finance and tourism, while UAE entities have become major investors across the continent. Companies like the Abu Dhabi-based Etisalat and Dubai-based Emirates have become household names across the continent, and are major trade and connectivity enablers; the Dubai-based ports operator, DP World, runs eight marine and inland terminals on the continent. There are an extraordinary 12,000 African businesses registered with the Chamber of Commerce in Dubai.

Saudi Arabia recently announced a major petrochemical and refinery investment in South Africa as part of $10 billion of planned investments. Saudi Arabia’s knowledge in building large-scale industrial enterprises – the kind that create lots of jobs – like Saudi Aramco and the petrochemical company SABIC should be shared widely across the continent. Turkey continues to invest broadly across African markets and Turkish Airlines serves as a force multiplier of connectivity, while Morocco has positioned itself well as an air, finance and education hub linking Europe to sub-Saharan Africa. Egypt is seeking to use its tech talent to become a digital hub.

All of this is positive, but it’s not one-way. Sub-Saharan African entrepreneurs and businesses can enrich the broader Middle East and North Africa region with their dynamism and ability to achieve scale and breakthroughs in often difficult circumstances. African creative industries deserve mention here. Aubrey Hruby, an astute observer of all things to do with African business, notes that “African film, music, and fashion are exploding on the world stage” and the Nigerian film industry and South African visual-arts sector are only at the beginning of their growth. Lessons can be drawn and shared.

Every year, Dubai hosts the World Government Summit, a gathering of notables that seeks to tackle our world’s biggest challenges. While it is useful to hear from the Managing Director of the IMF, there is nothing more heartening for a mayor of an African or a Middle Eastern city to sit with a counterpart and exchange ideas. Sure, Zurich or Paris may have an innovative solution to a city problem, but when a municipal official in Cairo learns something useful from a municipal official in Lagos, they are, in some ways, speaking the same language.

In that respect, cross-border trade and investment flows linking the broader Middle East with Africa can enrich both sides, but it’s not only about the numbers. The dialogue must become much more robust. There’s a lot Dubai can learn from Dakar, and a great deal that Abu Dhabi can share with Addis Ababa.

Afshin Molavi is a senior fellow at the Foreign Policy Institute of the Johns Hopkins University School of Advanced International Studies, and editor and founder of the New Silk Road Monitor.