Addis Ababa, 16 August 2023 (ECA) - Touted as the world's largest single trade area by size, the African Continental Free Trade Area (AfCFTA), could transform the fortunes of the so-called demographic dividend: youth. Young people between the ages of 18-35 make up more than 70 percent of the population in Africa. They are an attractive asset in accelerating Africa’s economic growth and industrialisation.
The African Development Bank forecasts that there will be 850 million youth by 2050, and by 2063, young people will constitute half of the 2 billion working-age population. This asset class can deliver demographic dividends if the right policies are put in place to promote adequate investments in the youth, according to the AfDB.
The AfCFTA, bringing together 55 countries, with a population of 1.3 billion people and a combined GDP of approximately US$3.4 million will boost intra-African trade by eliminating trade barriers through Protocols on Trade in Goods and Services, Investment, Intellectual Property Rights and Competition Policy.
Launched two years ago, the AfCFTA presents a fresh opportunity for the youth in Africa through the promotion and expansion of trade.
The Economic Commision for Africa (ECA) spoke with Julie Kubia, Marketing and Market research director at Africa Field Agents (AFA), a Marketing and Market research company based in Nairobi-Kenya to understand the opportunities and obstacles for the youth in the implementation of the AfCFTA.
What trade opportunities would you say are offered by the AfCFTA for the youth?
The AfCFTA holds immense potential for the youth by creating abundant trade opportunities. You can imagine what it means when Africans can finally access a single market to sell or access goods and services across the entire continent. The removal of barriers means a lot to young people who are often looking for new markets and customers. They are entrepreneurial, they are open-minded and view risk differently. The agreement is driven by a spirit of entrepreneurship, allowing young Africans to trade freely across borders and tapping into new markets.
We trade a lot with Europe, China and others, but increasing that potential for a young Kenyan farmer or entrepreneur to find a market for world renown Kenyan tea in Nigeria or Morocco, and accessing Moroccan Mint tea for local consumption here in Kenya is a huge opportunity.
But it’s also about increasing opportunities for jobs in manufacturing and tapping into new value chains in agriculture or technologies because the AfCFTA also encourages investment and industrialization. New skills will emerge and so will new opportunities.
One of the most exciting aspects of the agreement is its emphasis on the digital economy, allowing young entrepreneurs to leverage technology to amplify their businesses and participate in e-commerce on a wider scale. As the demand for goods and services escalates across the continent, the youth can take advantage of this unprecedented trade agreement to harness their capabilities and become key players in Africa's untapped potential and economic renaissance.
While its primary objective is to foster intra-African trade and boost economic growth, ask any young person on the continent and they will tell you about their dream of traveling to other countries. We often think of travel in “overseas” terms. But the AfCFTA’s protocol on free movement of people is a game changer. If young people can trade and find jobs within the continent, they would contribute to the prosperity of Africans.
Is the Protocol on Women and Youth necessary in promoting youth in trade in your view?
We live in a very young continent – experts tell us that 50% of the continent’s population is young people. In addition, women comprise 50% of the same population. It goes without saying that they are the key drivers of trade. The landscape of traders, the hustlers, as we call them in my own country Kenya are essentially young people – women. The protocol is essential for promoting women and young people, because they are the majority running small businesses – SMEs and start-ups. By ensuring that women and youth are actively engaged in trade on this continent, we pave the way for inclusive economic growth. There is no other option but to focus on women and youth – they are the present and the future.
How does the AfCFTA facilitate the role of the youth in trade in Africa?
Africa is predominantly a continent of young people. The AfCFTA is set to revolutionize the role of youth in trade across the African continent.
Young people are not afraid to break down barriers and connect with others. Engaging the youth in trade not only paves the way for sustainable economic development but also ensures a promising future for Africa and its young population. The youth possess unique skills, innovative ideas, energy and desire to contribute to their communities. They can play a pivotal role in revitalizing the African trade landscape, creating job opportunities and promoting economic integration.
What kind of challenges would you say youth encounter in the trade space in Africa and what needs to be done to eliminate such challenges?
Entrepreneurship is a tough business. It’s tough for anyone, regardless of age. The youth face a myriad of challenges that hinder their active participation and success. One of the key challenges faced by youth entrepreneurs in Africa is the limited access to capital and funding. Many young entrepreneurs struggle to secure the necessary financial support to launch and sustain their businesses. Traditional financial institutions often require collateral or a lengthy credit history, which is an obstacle for many aspiring young entrepreneurs who may not have access to these resources.
We need more access to domestic funding. We also need banking systems that are suitable for this generation – need to dramatically change their understanding of risk. We will not thrive as a continent if we continue to use old models of assessing risk.
How important would you say the need is for young entrepreneurs to understand the value of market research, for instance?
In the competitive landscape of entrepreneurship, the need for market research cannot be overstated, particularly for young entrepreneurs seeking to carve their niche. Market research plays a pivotal role in empowering young entrepreneurs by providing crucial insights into consumer preferences, market trends, and industry dynamics.
Market research validates entrepreneurs's ideas and refine their strategies to align with their target market needs. It may sound like an abstract idea, but I have seen many businesses fail due to lack of attention to research. For instance, introducing and selling a new product brand in the market, say a high-cost water purifier for domestic use in Kenya, using sales figures from the US, UK and Australian markets. Kenya being a developing country with different priorities in terms of basic necessities and wallet spend, it would be a gross misconception to assume that the uptake would be the same. Potential customers in developed countries would be more open to purchase such products at higher prices if their needs are met compared to the Kenyan market.
Issued by:
Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Ethiopia
Tel: +251 11 551 5826
E-mail: eca-info@un.org
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