The Canada-Africa Economic Strategy: A bold approach for promoting collaboration

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The Canada-Africa Economic Strategy: A bold approach for promoting collaboration

The Canada-Africa Economic Strategy: A bold approach for promoting collaboration

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July 20, 2023

On December 16, 2021, the Prime Minister of Canada commissioned the Minister of International Trade, Export Promotion, Small Business and Economic Development (the Minister) to devise a strategy to stimulate economic cooperation across African countries, which would support the growth of the African Continental Free Trade Area (AfCFTA), promote infrastructure investment, and expand collaborations in research and innovation between Canada and African countries.¹ This mandate forms part of a broader mandate for the Minister to strengthen and secure critical supply chains and advance Canada’s export diversification strategy.² In implementing this mandate, the Minister proposes to create a Canada-Africa Economic Cooperation Strategy (CA-ECS) to amplify and diversify trade and investment relations with African partners. In addition, the CA-ECS endeavours to strengthen the rules-based international trading system and make substantive contributions to the economic, social and environmental imperatives of both Canada and African countries.³ This initiative is being advanced at a time when many countries around the world are re-evaluating their ties with some trading partners, and in some cases, like that between Canada and African countries, strengthening existing relationships.

Canada-Africa trade today

There is a fair amount of trade between Canada and African countries and, over the past two decades, Canada’s trade relationship with African countries has experienced significant growth. Between 2001 and 2018, Canadian exports to African countries more than tripled, reaching US$3.3 billion.⁴ In 2022, Canada’s top export destinations in Africa were Algeria, Morocco and Nigeria, with goods exported valued at approximately CA$2.5 billion.⁵ On the import side, the main African countries importing to Canada in 2022 were South Africa, Nigeria and Egypt, totalling a combined import value of CA$5.3 billion.⁶

Notably, Canada’s top exports to Algeria, Morocco and Nigeria consisted of products from wheat farming, non-metallic mineral mining and quarrying and iron ore mining.⁷ On the import side, the leading goods imported by Canada from South Africa, Nigeria and Egypt were oil and gas, processed metals and precious minerals like gold and silver.⁸

While these figures indicate some cross-border activities, the substantial disparity in trade volumes compared with other continents underscores the underexplored potential for Canada to further enhance its trade relations with African countries, highlighting the crucial importance of the CA-ECS. For instance, in 2022, the total export value of goods from Canada to the top three Asian countries was CA$55.3 billion⁹, over 22 times the value of exports from Canada to the top three African countries in 2022, while the import value was CA$130 billion.¹⁰ Similarly, with Europe, the combined export value of goods to the top three European countries was CA$32.5 billion¹¹, and the import value was CA$43.3 billion.¹² Lastly, in Latin America, the combined export value to the top three Latin American countries was CA$6.8 billion¹³, with combined imports amounting to CA$14.9 billion.¹⁴ This shows that there is significant room for improvement in the volume and value of trade between Canada and African countries.

Future collaboration opportunities

Africa possesses 60% of the world’s arable land and 30% of its mineral deposits. ¹⁵ These deposits include essential minerals for green technologies, digital advancements and renewable energy. ¹⁶ Furthermore, Africa is the world’s youngest and fastest growing continent,¹⁷ and projections indicate that Sub-Saharan Africa will house one out of every four individuals by the year 2050, showing there is also massive human capital on the continent.¹⁸ Moreover, with the ratification of the AfCFTA, Africa is poised to connect 1.3 billion people across the continent into a unified and cohesive common market.¹⁹Inter-country projects like the Lobito rail corridor should become easier to implement. Once fully implemented, the AfCFTA has the potential to amass a combined GDP exceeding US$4.6 trillion with easier and more streamlined access to it, positioning the continent as an economic powerhouse equivalent to the worlds fifth-largest economy.²⁰ This potential coupled with Africa's rapid technological adaptation presents vast economic prospects. The robust and growing population of African immigrants in Canada also signifies a strong human capital connection that can bolster this collaboration.

It is crucial to note that African countries have advanced Agenda 2063, a blueprint and master plan for transforming Africa into the global powerhouse of the future. It is the continent’s strategic framework that aims to deliver inclusive and sustainable development.²¹ The AfCFTA forms part of the overall strategy of Agenda 2063, which also aims to see Africa emerge as a major social, political and economic force in the world. In light of Agenda 2063, there is a reimagined approach by many African countries who view trade as a tool that should be mutually beneficial between trading partners. Essentially, proposals for increased trade between African countries and Canada are expected to evolve from being primarily dominated by commodities to also including value-added goods and services. With the human capital nexus between Canada and African countries, there is significant potential for the advancement of trade in the areas of agriculture, renewable energy, technology amongst others, spearheaded by stakeholders who have an interest in both ecosystems.

Progress on the CA-ECS

There have been several consultation sessions to advance the CA-ECS. On May 23, 2023, the Minister welcomed the African Union Commissioner for Economic Development, Tourism, Trade, Industry and Minerals, to the inaugural Canada-African Union Commission Trade Policy Dialogue, with the Minister simultaneously announcing the launch of public consultations on the CA-ECS. On July 5, 2023, the Canada-Africa Chamber of Business hosted the Parliamentary Secretary to the Minister of International Trade, Export Promotion, Small Business and Economic Development who took part in a public consultation session.

The CA-ECS is currently in the consultation stage and has not been implemented yet. The consultation stage will continue until July 31, 2023, during which time the Government of Canada actively seeks the input of the Canadian public and interested stakeholders to shape the priorities for the development of the CA-ECS. Further updates will be provided as they unfold.

As the world’s largest law firm, Dentons possesses exceptional expertise to provide counsel on matters relating to the CA-ECS and more broadly can provide counsel to businesses with a nexus between Canada and Africa. With sixteen offices strategically located across Africa, in addition to our extensive network of Nextlaw Global Referral Network firms, we offer unparalleled support spanning the African continent.

For any inquiries pertaining to the CA-ECS or business between Canada and African countries, contact the authors, Greg McNab or Mariam Momodu.

We wish to thank Ilias Warsame, summer student in Toronto, for his assistance with this article.