Africa’s transformation: A continent ready for economic growth

Key takeaways:

Africa’s rapid population growth and urbanisation are driving unprecedented economic opportunities across diverse sectors.

The AfCFTA is unlocking Africa’s trade potential, fostering integration, and boosting intra-continental commerce.

Innovation and sustainability are key to navigating Africa’s transformative era and achieving long-term growth.

Africa is entering a transformative era, defined by powerful demographic shifts, deepening economic integration, and accelerated innovation. For business leaders and investors, this period of dynamic change presents remarkable opportunities for growth and resilience. A new and transformative business age has begun, and understanding the forces shaping the continent's future is essential for businesses to navigate it.

“Africa is redefining the future of global business. Africa stands at the forefront of global growth, offering unparalleled opportunities for businesses and investors. With vast natural resources, a rapidly expanding middle class, accelerating digital transformation, and a strong commitment to sustainable development, the continent is shaping a future defined by innovation and resilience.
At RSM, we believe Africa’s story is one of possibility and progress, and we are committed to empowering organisations to be part of this journey. Through our global reach and local insight, we help businesses unlock new markets and navigate complexity to take advantage of emerging opportunities by building strategies that deliver sustainable success across the continent.”

Clive Betty
Regional Leader – Africa
RSM International

Population and economic dynamics in Africa

With around 1.56 billion people today and an estimated 2.02 billion by 2040, the continent offers scale matched by few global markets. The level of urbanisation across Africa is projected to grow from 57% in 2025 to 62% in 2040, with an estimated 17 megacities inhabited by more than 10 million people by 2050. Growth of this size highlights the giant wave of urban transformation that is sweeping through the continent but also signals potential challenges via strained infrastructure and services, if their development does not maintain pace with population growth.

The economic fundamentals support this demographic story, with a total forecast GDP of $2.8 trillion by 2025’s end, up from $2.3 trillion in 2023. This growth spans multiple sectors, from digital services to mineral extraction, creating diversified investment prospects.

“Africa’s greatest resource is its people. We will not benefit from any of the budding sectors unless we intentionally focus on developing and empowering our young people for the future.”

John Walabyeki
Managing Partner, Uganda

Unlocking opportunities with the AfCFTA: Africa's trade advantage

The African Continental Free Trade Area (AfCFTA) is a significant trade agreement aimed at creating a single, unified market for goods and services across the African continent. By bringing together the 55 member states of the African Union, it represents the largest free trade area in the world by number of participating countries.

Having come into effect in 2021, the core objective of the AfCFTA is to boost intra-African trade by progressively eliminating 90% of tariffs and reducing non-tariff barriers. The agreement seeks to enhance economic diversification and industrialisation, fostering a more competitive and integrated continental economy. Ultimately, the AfCFTA is designed to strengthen Africa’s position in the global marketplace and drive sustainable economic growth and development for its population.

By 2045, it is projected to boost intra-African trade by 45%, with significant growth in manufacturing, agro-processing, and services, while raising Africa's GDP by 1.2% and welfare by 0.9%.

For middle market businesses, this means:

Market access: Direct routes to 1.3 billion consumers without traditional trade barriers
Supply chain optimisation: Regional sourcing opportunities, reducing costs and complexity
Competitive positioning: Early movers gain substantial advantages in newly integrated markets

“The Africa Continental Free Trade Area (AfCFTA), once fully actualised, has the potential to deliver significant economic and social benefits to its people”

George Mutua
Partner, Kenya

However, persistent challenges such as high inflation, fiscal deficits, and unsustainable debt levels threaten to undermine the economic and market gains that AfCFTA hopes to deliver. The United Nations Economic Commission for Africa’s (UNECA) 2025 economic report highlights that, although the continent’s debt-to-GDP ratio is expected to decrease from 67.3% in 2023 to 62.1% by 2025, the burden of high debt servicing costs continues to redirect resources away from essential development priorities.

Unlocking the AfCFTA’s full potential through investment

Climate change further compounds these challenges, with annual economic losses currently estimated at $7 to $15 billion and projected to escalate to $50 billion by 2030. The AfCFTA offers a pathway to mitigate these impacts through green industrialisation and investments in renewable energy, positioning Africa as a leader in climate-proofed development strategies.

To fully leverage the AfCFTA’s potential, UNECA estimates $120.83 billion in transport infrastructure investment will be required by 2030, alongside regulatory reforms to enhance market access and foster innovation. Trade facilitation measures, such as harmonising customs procedures and reducing non-tariff barriers, will be critical in unlocking the full benefits of the agreement.

The takeaway

Africa stands on the brink of a transformative future, driven by its dynamic population growth, economic diversification, and the unprecedented opportunities presented by the AfCFTA. As the continent continues to redefine global business, commitments to innovation, sustainability, and regional integration positions it as a potential key player in shaping the world’s economic landscape. For businesses and investors, understanding and embracing Africa’s unique potential is an opportunity for sustainable growth and resilience in an ever-evolving global market.

Explore the insights, opportunities, and strategies shaping the future of Africa’s middle market in our comprehensive report – Africa's Middle Market: Driving Business Growth in a Transformative Era.