Trade vs. Startups: Two Futures for Africa, One Clear Winner

Dr. Jibril Mohamed Ahmed, Africa's startup Mentor of the year (2022).

Africa stands at a crossroads. On one side, we have traditional trade, a system entrenched in centuries of logistics, ports, customs regulations, and an intricate web of paperwork. On the other side, we have the thriving world of startups, a digital revolution that promises limitless potential with no borders and no tariffs.

It’s a classic debate: the old guard versus the new wave. But what happens when the two collide, and what does the African Continental Free Trade Area (AfCFTA) reveal about our current trade future? To answer that, we need to dig into the heart of AfCFTA’s shortcomings—and the untapped promise of African startups.

AfCFTA: A Noble Dream, A Bumpy Ride
The African Continental Free Trade Area (AfCFTA) was heralded as a panacea for Africa's deep-rooted trade issues. With the goal of creating a single market for goods and services, AfCFTA sought to break down intra-Africa trade barriers and fuel economic growth. And for a while, it seemed like the future had arrived.

But here we are, years after its grand launch, still facing the same old challenges: cumbersome customs procedures, long port delays, and an overwhelming reliance on trucks that travel at the speed of bureaucracy. The dream of free-flowing trade is still chained to the reality of physical goods, cumbersome logistics, and outdated systems. Some might argue that AfCFTA is like a well-meaning family member trying to get you into the 21st century while still insisting on using a dial-up connection.

The failures are not in the idea itself—far from it. The problem lies in the execution. African countries still struggle with inefficiencies in infrastructure, inconsistent regulations, and political hurdles that prevent the smooth movement of goods. It's not just about signing agreements—it's about making the systems work on the ground. The gap between ambition and reality has proven difficult to bridge, and in the face of these failures, the question becomes: Is there a faster, smarter, and more scalable solution?

Startups: The Agile Alternative
Enter the world of startups. While traditional trade requires trucks and ports, startups thrive in the digital realm—cloud services, mobile wallets, healthtech apps, and artificial intelligence (AI) solutions. Here, there are no physical borders, no tariffs on innovation. A bright coder in Nairobi can build an app that benefits millions across the continent, from Lagos to Cape Town. In this new Africa, ideas move faster than trucks, and the only signature required is a click.

Startups have become the heart of Africa’s economic revolution. They are nimble, scalable, and have the power to leapfrog traditional systems. The technology boom has seen digital wallets transform the way people interact with money, e-commerce platforms break into untapped markets, and mobile health apps offer solutions to remote communities. It’s the future Africa has been waiting for.

But even startups face their own set of challenges. Limited access to funding, inadequate infrastructure for digital services, and regulatory hurdles often stymie growth. While a tech entrepreneur in Addis Ababa might launch an innovative platform, they are still encumbered by slow internet speeds, expensive data costs, and sometimes outdated regulations that struggle to keep up with the speed of innovation.

Trade vs. Startups: The Clear Winner
So, where does that leave us? If AfCFTA is still stumbling through its infancy and startups face their own set of challenges, is there a clear winner?

Yes. The clear winner is the startup ecosystem, but with a caveat: we need to support it. The potential of African startups far outweighs the constraints of traditional trade, especially when we factor in the speed, scalability, and innovation they bring to the table. However, for this potential to be realized, we must focus on removing the barriers that stifle innovation—namely, inadequate infrastructure, unreliable internet connectivity, and restrictive regulations.

Africa’s future is digital. The next wave of economic growth won’t be driven by cocoa exports or congested ports but by code, cloud services, and apps that can transcend borders without waiting in line at customs.

But that doesn’t mean we should abandon trade altogether. The AfCFTA vision is still worth pursuing, but it needs to evolve. It’s not just about removing tariffs on physical goods—it's about creating an infrastructure that facilitates the flow of ideas and services. Trade should evolve to meet the digital age, supporting not only the transportation of physical goods but also the seamless movement of digital services across the continent.

So what do we need to work on? We need to invest in infrastructure, both physical and digital. We need better internet connectivity, more reliable data networks, and policies that encourage innovation rather than stifle it. We need to foster an environment where startups can thrive—where a coder in Congo can launch a platform for agricultural innovation that reaches the markets of East Africa with ease.

We also need to modernize our trade systems to recognize the importance of digital services and cross-border e-commerce. We must break free from the belief that economic success is solely defined by the movement of physical goods. The future of Africa’s trade will be built on data, services, and ideas—not just trucks, ports, and fax machines.

In this debate between trade and startups, there’s only one clear winner: the future of Africa lies in its ability to embrace digital transformation. And if we get it right, we won’t just be watching the future unfold—we’ll be leading it.