Africa-Canada Trade and Investment

Opportunities and Challenges

Africa Canada Policy Innovation Lab | 2025

Summary

• Strategic Context: Shifting global alliances and economic uncertainties demand diversified partnerships; Africa presents emerging opportunities.

• Untapped Potential: Despite longstanding diplomatic ties, Canada–Africa trade volumes remain low relative to the continent’s potential.

• Complementary Strengths: Canada brings capital, expertise, and institutional capacity; Africa offers growing markets, natural resources, and demographic dynamism.

• Africa’s Economic Promise: Rapid population growth, resource wealth, and regional integration through AfCFTA position Africa as a key global player.

• Canada’s Strategic Offerings: Canada’s strengths in clean technology, agriculture, mining, artificial intelligence, cybersecurity, and governance make it a reliable economic partner.

• Green Energy: Africa’s vast renewable energy potential, combined with its rapidly growing energy demand, creates a compelling opportunity for investment. Canadian support for green infrastructure and climate resilience aligns well with Africa’s development priorities and sustainability goals.

• SME Collaboration: Canada–Africa SME partnerships can address financing gaps, enhance innovation, and expand market access.

• Tech Innovation Exchange: Significant opportunities exist in fintech, AI, and digital inclusion; however, regulatory inconsistencies and the digital divide remain challenges.

• Agriculture: Canadian innovations and sustainable practices can help improve African food security, productivity, and climate resilience.

• Trade Frameworks: AfCFTA and Canada’s General Preferential Tariff create key trade opportunities but require structural improvements to maximize impact.

• Challenges: Persistent barriers include infrastructure deficits, regulatory complexity, limited access to finance, and inconsistent policy implementation.

• Policy Recommendations: Prioritize high-impact sectors, streamline trade regulations, and advance principled, rules-based trade frameworks for long-term partnerships.

Strategic Context and the Case for Diversified Partnerships

The global economic and geopolitical landscape is undergoing profound change. As nations become more economically interconnected, traditional alliances are giving way to transactional, interest-based partnerships. Rising protectionism, supply chain vulnerabilities, and shifting global power dynamics have created a complex mix of economic uncertainty and strategic recalibration. In this environment, countries like Canada must reassess their global strategies and diversify economic partnerships—especially with emerging regions such as Africa.

Africa is also rapidly gaining global economic relevance, driven by demographic expansion, urbanization, technological innovation, and resource endowments. Strengthening ties with the continent is not only an opportunity but a strategic necessity.

Current Trends in Africa–Canada Trade and Investment

Canada and African nations share over seven decades of diplomatic and development cooperation. However, trade and investment volumes have not kept pace with the continent's growing potential. 

Over the past decade, trade volumes between Canada and Africa have reflected both growth and volatility, shaped by global economic trends and sector-specific developments. While fluctuations have occurred, current trends indicate steady growth. For instance, Canadian merchandise exports to Sub-Saharan Africa rose by 3.7% in 2023. As of 2024, Canada’s merchandise trade with African countries reached a total value of $15.1 billion—a nearly 30% increase over the past five years. This upward trend reflects more than stronger trade figures; it signals a broadening of the trade landscape, with increasing engagement across a wider range of sectors and markets. Yet, the pattern of uneven growth underscores the untapped potential of the Canada–Africa trade relationship and highlights the need for more strategic and sustained efforts to unlock long-term opportunities.

Canada and Africa offer complementary strengths. Canada brings technical expertise, institutional capacity, and capital, while Africa offers fast-growing markets, resource wealth, and a demographic dividend.

Africa’s Economic Promise

By 2050, Africa is projected to house one-quarter of the world’s population. Its resource endowments include critical minerals essential for the global green transition and high-tech industries. Regional integration efforts, especially the African Continental Free Trade Area (AfCFTA), foster economies of scale and more attractive markets for global partners. Africa is not just a destination for investment—it is a strategic partner in shaping future global supply chains and innovation ecosystems.

Canada’s Strategic Trade and Investment Capabilities

Canada is well-positioned to support Africa’s development goals. With established expertise in infrastructure, clean technology, sustainable resource management, agriculture, education, and governance, Canada offers stability and reliability. Its growing interest in diversifying trade amid global protectionist trends positions Africa as a high-potential frontier.

Stronger Canada–Africa trade and investment has clear benefits for both regions. For Canada, increased engagement fosters economic resilience, diversifies supply chains, and grants access to high-growth markets. This is especially important as trade tensions and protectionist sentiments challenge traditional alliances. The Canadian government’s recently launched Africa Strategy reflects this pivot, prioritizing inclusive growth, shared prosperity, and sustainable development. This strategy is strengthened by a variety of trade and investment tools that Canada can leverage to enhance its economic cooperation with the African continent.

For African nations, Canadian investment and collaboration offer promising opportunities for infrastructure development, technology transfer, and economic diversification. Programs like Canada's General Preferential Tariff, which grants market access to many African countries, enhance the export potential of African goods. Furthermore, Canada’s support of African-led initiatives, including the AfCFTA and the African Union Agenda 2063, strengthens the continent’s broader economic transformation goals and position in global trade systems.

Sectoral Opportunities for Collaboration

Africa’s Green Energy Transition

Africa’s green energy sector is rapidly emerging as a focal point for international collaboration, driven by the continent's vast renewable energy potential and the imperative for sustainable development. Africa holds 60% of the world’s solar potential and 30% of global reserves of critical minerals. Its energy demand is surging, with consumer spending projected to reach USD 3 trillion. This convergence of natural resources and market growth offers a unique opportunity for trade and investment partnerships in the renewable energy sector.

Canadian firms and government agencies have supported Africa’s low-carbon transition through financing, expertise, and technology. Projects include solar mini-grids in rural communities and broader collaborations in wind, hydro, geothermal, and marine energy.

In the private sector, Canadian firms have established solar mini-grids to supply electricity to rural communities. This includes numerous solar investments in Namibia, Kenya, and South Africa.

Canada’s support also encompasses strategic government partnerships with key African institutions to promote the green energy transition.

Key initiatives include:

• The Canada-IFC Renewable Energy Program (CAD 150 million)

• FinDev Canada's US$ 100 million commitment to FirstRand Bank to support climate finance in Sub-Saharan.

• Canada’s CAD 132.9 million contribution to the Canada-African Development Bank Climate Fund (CACF)
  

These investments underscore Canada’s dedication to supporting Africa’s shift towards sustainable energy. They position both regions to capitalize on the long-term economic, environmental, and geopolitical opportunities of a green energy future.

SMEs and Africa-Canada Business Partnerships

Small and medium-sized enterprises (SMEs) play a significant role in economic development across Africa, contributing to growth, job creation, and innovation. These enterprises are essential to various sectors, including agriculture, manufacturing, technology, and services. However, SMEs often encounter barriers when trying to access international markets and secure capital.

Partnerships between African SMEs and Canadian businesses can help address these challenges and promote trade and investment flows. Canada offers market infrastructure and global distribution networks that present opportunities for African SMEs aiming to expand their market reach. Sectors such as agri-food, textiles, and value-added manufacturing are areas where African SMEs can utilize Canadian market access to build export businesses.

Collaborating with Canadian firms can also facilitate technology transfer, improve product quality, and enhance operational efficiencies. These partnerships enable African SMEs to adopt best practices and strengthen competitiveness.

Mechanisms exist to support these partnerships. Canadian institutions like the Canadian Trade Commissioner Service and development finance agencies such as FinDev Canada provide programs to connect African SMEs with Canadian counterparts. These initiatives offer services, including training, mentorship, and financial assistance, to aid in business development and market entry. Trade missions and business forums also provide platforms for networking, knowledge exchange, and partnership development.

Examples of successful Africa-Canada SME partnerships include African agri-businesses exporting products like shea butter, cocoa, and cashew nuts through Canadian distributors and African technology startups collaborating with Canadian firms to develop software solutions. These partnerships can contribute to economic diversification in Africa while providing new market opportunities for Canadian businesses.

Africa-Canada Tech Innovation Exchange

The increasing importance of the digital economy presents a significant opportunity for enhanced collaboration between Africa and Canada, particularly in areas such as fintech, agritech, and e-commerce. Africa’s rapidly growing tech ecosystem, fueled by youth-driven innovation and mobile penetration, offers an attractive market for Canadian tech companies. Equally, Canada’s expertise in artificial intelligence, data analytics, and cybersecurity can play a vital role in supporting Africa’s ongoing digital transformation.

For example, Canadian venture capital firms have invested in fintech startups in countries like Nigeria and Kenya, promoting innovative payment solutions and advancing financial inclusion. Moreover, partnerships between Canadian and African universities have contributed to advancing knowledge and collaboration in critical areas such as AI and data science. Noteworthy Canadian investments include funding for innovation hubs in Rwanda and support for developing mobile health technologies in Ghana, illustrating the potential for mutually beneficial tech partnerships between the two regions.

The Digital Divide: A Shared Priority

The digital divide—the disparity in access to reliable Internet, digital infrastructure, and technological literacy—represents a significant obstacle to inclusive development and global innovation. For both Africa and Canada, this divide impedes equitable participation in the digital economy and hinders the full potential of technological collaboration.

Limitations in broadband coverage, unequal access to digital tools, and deficiencies in digital skills continue to isolate numerous African communities from emerging opportunities. These challenges restrict African entrepreneurs' ability to expand digital ventures and impede effective collaboration with Canadian partners in sectors such as fintech, e-commerce, and artificial intelligence.

If unaddressed, the digital divide threatens to perpetuate inequality and stall progress toward mutually beneficial innovation ecosystems. Bridging this divide must be considered as a strategic and shared priority. It is essential for advancing an inclusive and future-ready Africa–Canada digital partnership that can drive sustainable growth, economic transformation, and long-term prosperity across both regions.

Regulatory Challenges for Tech Innovation Exchange

While the opportunities for tech innovation exchange between Africa and Canada are substantial, fully realizing this potential requires overcoming significant regulatory hurdles that currently hinder seamless collaboration. The regulatory frameworks governing technology innovation, data protection, and digital trade differ in several ways between Canada and African nations, shaped by distinct legal environments, economic priorities, and governance structures.

In Canada, these areas are regulated at both the federal and provincial levels. For example, data protection is governed federally by the Personal Information Protection and Electronic Documents Act (PIPEDA), but provinces such as Quebec, Alberta, and British Columbia have their own privacy laws that can supplement or even override PIPEDA under certain circumstances. Similarly, cybersecurity regulations and digital trade policies are influenced by national strategies but may also be affected by provincial initiatives, particularly regarding infrastructure and local businesses.

In contrast, Africa presents a diverse regulatory landscape. Countries like Nigeria and Kenya have established comprehensive data protection laws, including the Nigeria Data Protection Regulation (NDPR) and the Kenya Data Protection Act. Ghana has also introduced the Data Protection Act of 2012 (Act 843), which regulates the processing of personal data and established the Data Protection Commission to ensure compliance. However, some African nations may lack cohesive policies in this area.

Understanding these regulatory differences, identifying areas of alignment, and fostering dialogue on best practices will be essential for creating a more harmonized and supportive environment that promotes sustainable, cross-border collaboration in tech innovation.

Agriculture: Leveraging Canadian Innovation for African Growth

Canada is recognized as a global leader in agricultural innovation and commercial agriculture, driven by advanced technologies and sustainable practices. According to the Organisation for Economic Co-operation and Development, Canada ranks among the top agricultural producers and exporters worldwide, particularly in grains, oilseeds, and pulses. The latest data from Statistics Canada indicates that Canadian farm cash receipts totaled $98.6 billion CAD in 2023. In 2024, Canada reported an agricultural trade surplus of $13.3 billion. These metrics illustrate entrepreneurial growth and investment in innovation within Canada’s agricultural sector, providing a comprehensive view of its impact on the global stage.

In Africa, agriculture significantly contributes to its GDP. The African Development Bank estimates that agriculture accounts for roughly 15% of the continent's total GDP. This sector also employs over 60% of Africa’s labor force, making it an essential source of livelihood, particularly in rural areas. However, productivity remains low due to factors such as limited access to modern technology, the impacts of climate change, and inadequate infrastructure.

African nations can greatly benefit from Canada's sustainable agriculture innovations through targeted strategies that emphasize knowledge sharing and collaborative development. Canada can leverage its expertise in precision agriculture by facilitating access to and training on technologies such as GPS-guided machinery and remote sensing for optimized resource management. To address soil management challenges, collaborative programs could introduce and adapt Canadian soil testing and conservation techniques, ensuring their applicability to diverse African soil types. Climate-resilient crop varieties can be introduced through joint research initiatives to develop innovative agricultural solutions tailored to specific African ecosystems. For example, joint ventures could focus on developing localized irrigation systems, pest management strategies, and post-harvest technologies that minimize waste. Beyond technology, Canada can support the establishment of strong agricultural extension services, providing training and technical assistance to African farmers. This support can be facilitated through digital platforms, mobile applications, and hands-on training programs.

Trade and Investment Frameworks

The African Continental Free Trade Area

The African Continental Free Trade Area (AfCFTA) aims to establish a unified market for goods and services throughout Africa. Its objectives include removing trade barriers, boosting intra-African trade, and promoting economic integration on the continent. The AfCFTA also seeks to enhance economic diversification, draw foreign investment, and support industrial development among its member states. 

Creating a unified African market, with a population of over 1.3 billion people, offers Canadian businesses access to an expanded market and empowers African nations to leverage their collective strength in trade negotiations. This unified market facilitates economies of scale and enhances Africa's attractiveness as an investment destination, benefiting stakeholders from both regions. The potential impact on trade flows between Africa and Canada is considerable, as the AfCFTA aims to streamline trade procedures and reduce non-tariff barriers, creating a more predictable and efficient trade environment. As intra-African trade increases, African businesses gain greater capacity to participate in global value chains, making them more attractive partners for Canadian firms. This could increase exports from both sides, particularly in the technology, agriculture, and infrastructure sectors.

Canada’s General Preferential Tariff Scheme

Canada's General Preferential Tariff provides preferential access to the Canadian market for eligible developing countries, including many African nations. The program aims to lower tariffs on various goods, facilitating easier entry for African exporters into Canadian markets. This initiative supports economic development by improving trade opportunities for African businesses, especially in sectors like textiles, agri-food products, and manufactured goods. Additionally, the program acts as a catalyst for strengthening trade relations, encouraging eligible countries to enhance their production capabilities and comply with international standards, thus fostering more sustainable trade partnerships.

Challenges in Africa-Canada Trade and Investment Relations

Despite the potential for mutually beneficial trade and investment, Africa-Canada economic relations face several significant challenges. Political and economic barriers, including instability in certain regions and fluctuating commodity prices, create uncertainty for investors. Infrastructure issues, such as inadequate transportation networks and unreliable energy supplies, hinder the efficient movement of goods and services. Tariffs and non-tariff barriers, despite preferential agreements, still pose obstacles to market access. Access to finance remains a critical challenge for African SMEs aiming to expand their operations and engage in international trade. Furthermore, limited market information and access, along with regulatory hurdles and compliance requirements, further impede trade flows. 

These challenges manifest in various sectors. For instance, in the green energy sector, political instability in certain areas can deter long-term investments in renewable energy projects. At the same time, infrastructure gaps can obstruct the development of transmission lines. In the SME sector, restricted access to finance and market information limits the ability of African SMEs to enter Canadian markets. For example, a promising agri-business in Ghana may struggle to meet Canadian food safety standards without significant investment in regulatory compliance, which is often challenging to secure. In the technology sector, regulatory obstacles related to data protection and cybersecurity can impede cross-border data flows and limit the growth of digital trade. For example, differing data privacy laws between Canada and specific African countries can create legal uncertainties for Canadian tech companies aiming to expand into that market. In the agricultural sector, infrastructure limitations can hinder the efficient transportation of perishable goods, while tariffs and non-tariff barriers can restrict market access for African agricultural products. 

Furthermore, although the African Continental Free Trade Area and Canada’s General Preferential Tariff offer benefits, they also have their limitations. For example, Canada’s tariff scheme product coverage and eligibility criteria may not adequately meet the needs of African exporters, and its unilateral nature permits changes at Canada's discretion. The AfCFTA, too, while promising, its successful implementation necessitates substantial political will and cooperation among member states, including intra-Africa harmonization of regulatory frameworks.

Opportunities and Policy Recommendations for Growth

The outlook for Africa-Canada trade and investment holds substantial potential, especially with the evolution of existing agreements and renewed interests in Africa, particularly with the launch of Canada’s first global Africa Strategy. There are several emerging opportunities for increasing trade and investment in key sectors, including:

1. Sustainable Agriculture: Leveraging Canadian agricultural technology to improve African food security and export potential, with a focus on precision farming and climate-resilient crops.

2. Accelerating clean energy collaboration: Investing in renewable energy projects, particularly solar and hydro, to address Africa's energy deficit and promote sustainable development.

3. Supporting digital inclusion: Fostering collaboration in fintech, agritech, and e-commerce to support digital inclusion and innovation.

4. Fostering infrastructure development: Improve transportation, logistics, and trade connectivity.

5. Enhancing SME partnerships: Provide financing, mentorship, and market entry support for African SMEs.

Specific policy initiatives are needed to address the limitations of the General Preferential Tariff and the African Continental Free Trade Area to enhance the effectiveness of trade agreements. Africa and Canada can act with long-term strategic intent toward predictable and principled trade and investment frameworks. One potential entry point is to consider integrating key components of both mechanisms—the AfCFTA and the General Preferential Tariff. This integration could support efforts to reduce non-tariff barriers, such as streamlining customs procedures and harmonizing product standards.