South-South Trade Agreements: A Lever for Shared Prosperity in Africa

In recent years, South-South trade agreements have emerged as a sub- stitute for traditional North-South trade relations, aiming to reduce dependency and deepen regional integration. Regional trade agreements like the African Con- tinental Free Trade Area (AfCFTA) are often designed with the promise of boost- ing intra-regional trade and economic prosperity. However, the extent to which these agreements contribute to inclusive and equitable growth remains subject to ongoing debate. Contributing to the broader discussion on Africa’s trade strate- gies as they relate to broader development goals, this paper explores the potential of the African Continental Free Trade Agreement for promoting inclusive growth in Africa. The study follows a three-step approach. First, a content analysis of the AfCFTA agreement to evaluate its objectives and implementation mechanisms. Second, an aggregate continent level analysis of trade and investment perfor- mance. Finally, comparative case studies examining trade dynamics, investment patterns and sectoral structures across different economies post-AfCFTA. The AfCFTA’s ambitions to achieve shared growth through enhanced industrializa- tion and intra-African economic integration has yet to materialize. Aggregate and country-level data reveal promising perspectives in terms of intra-African trade. However, these are offset by a persistent dominance of services (over 50% of GDP), low levels of industrialization, and a dependency on extra-continental FDI. This early-stage assessment indicates a clear gap between policy objectives and implementation, providing policy-makers with valuable insights for policy adjustment to better achieve the goals of the AfCFTA.