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Rising tariffs, geopolitical fragmentation, and persistent supply chain disruptions are roiling international trade. The World Trade Organization projects a 0.2 percent contraction in the global goods trade during 2025, which could deepen to 1.5 percent if tensions escalate.
UN Trade and Development warns that policy uncertainty is eroding business confidence and will slow global growth to 2.3 percent in 2025. Against this backdrop, developing economies are under mounting pressure to diversify partnerships and reduce external dependencies.
The pressure is particularly acute in North Africa. The region, comprising Algeria, Egypt, Libya, Morocco, Mauritania, and Tunisia, has long been tethered to European economic cycles. In 2023, the EU accounted for 45.2 percent of North Africa鈥檚 trade, making the region vulnerable to any slowdown in European demand. At the same time, North Africa has played a marginal role in international commerce, accounting for only 3.7 percent of global trade in 2023.
But this moment of uncertainty also represents a strategic opportunity for North Africa to look southward toward the fast-growing markets of Sub-Saharan Africa, which currently account for just 2.4 percent of North Africa鈥檚 total trade.
As I, and others, argued nearly a decade ago, stronger economic ties within the continent could reshape regional growth trajectories. That continues to be true today. With economic growth in Sub-Saharan Africa estimated at 3.7 percent in 2024 and projected to rise to 4 percent in 2025, the rest of the continent offers many opportunities to North African businesses as an emerging market for manufactured exports, and as a region for the expansion of value chains.
North African products, particularly from the automotive, fisheries, food processing, pharmaceuticals, and textiles sectors, would likely be well received in Sub-Saharan Africa, owing to their higher quality and competitive prices.
The region鈥檚 full integration with Sub-Saharan Africa would bring the largest gains in trade.
Audrey Verdier-Chouchane
Some progress has been made toward increasing intra-African trade and North Africa鈥檚 role in it. Morocco recently became the continent鈥檚 leading automobile exporter, for example, with sales of $6.4 billion in 2023. Many of these cars went to West Africa, in part as a result of regional free-trade agreements.
Some North African countries belong to economic communities in other regions, including the Common Market for Eastern and Southern Africa, and the Community of Sahel-Saharan States. But it is the ambitious African Continental Free Trade Area, or AfCFTA, that offers the best chance for deeper continental integration.
It came into effect in 2021 and has 54 active members, making it the world鈥檚 largest free-trade area in terms of membership. North Africa could play an important role in driving growth and enhancing trade within this area. The region has about 200 million consumers and occupies a strategic geographical position between Europe, the Middle East, and Sub-Saharan Africa. It also possesses significant natural resources, a diversified industrial base, and relatively well-developed human capital, and economic infrastructure.
AfCFTA is widely expected to boost economic growth, private-sector development, investment, and capital flows across the continent. A forthcoming study by the African Development Bank to assess the effect of the free trade area on regional economies, using the Global Trade Analysis Project model, suggests that this is especially true for North Africa.
Under every scenario, North Africa鈥檚 gross domestic product, and its components, are projected to increase by 2031. The region鈥檚 full integration with Sub-Saharan Africa would bring the largest gains in trade (5.5 percent) and GDP (0.77 percent). The study also predicts that implementing AfCFTA will lead to a decline in poverty and an increase in wages for both skilled and unskilled workers in the region.
The main downside of AfCFTA is in the fiscal domain. The African Development Bank study anticipates a reduction of customs revenues in North African countries; the least affected will be those that have already entered into bilateral free-trade agreements, or have relatively high levels of economic diversification and strong productive capacities.
There are also major barriers to realizing the potential of intracontinental trade, including inadequate infrastructure, tariff-harmonization challenges, and limited institutional coordination across Africa鈥檚 regional economic communities. But given the overall potential benefits, North African economies should make implementation of AfCFTA a high priority. Enhanced intra-African trade flows would promote further economic diversification, job creation, investment, and GDP growth, generating long-term prosperity and private sector development in North Africa.
In a fracturing global economy, regional solidarity has taken on new importance. By fully committing to AfCFTA and strengthening ties with partners in Sub-Saharan Africa, North Africa can chart a new path toward inclusive, resilient, and sustainable growth.
鈥� Audrey Verdier-Chouchane is lead economist for the North Africa region at the African Development Bank. 漏Project Syndicate