Developments in Africa’s Free Trade Area: Opportunities for Korean Investors

This research paper analyzes the implementation of the African Continental Free Trade Area (AfCFTA) and identifies strategic opportunities for Korean investors and the Korean government to reverse a decline in trade with Africa. It highlights the potential for Korea to leverage its expertise in capital goods, automotive manufacturing, and clean energy to integrate into emerging African regional value chains.

• Trade between the Republic of Korea and Africa peaked in 2011 and has since declined, primarily due to a reduction in Korean exports to the region. By 2019, Korean exports to Africa represented only 1.1% of its total exports.
• The AfCFTA aims to create a single market covering over 1.3 billion consumers across 55 countries with a combined GDP of $3.4 trillion. World Bank projections suggest the agreement could raise Africa's total exports by 29% and intra-African trade by 81% by 2035.
• Implementation of the AfCFTA is ongoing, with rules of origin agreed upon for over 87% of nearly 8,000 products. However, significant issues remain unresolved regarding the automotive industry, specifically the harmonisation of special economic zone (SEZ) concessions and the cumulative origination of African value added.
• Korea maintains a competitive advantage in capital goods, particularly water vessels, vehicles, and locomotives. In 2021, Korean water vessel exports represented 38.5% of total vessels imported into Africa.
• Korea lacks a competitive advantage in infrastructure and energy provision (dominated by China), intermediate goods like textiles and plastics, and household consumer items including electronics and pharmaceuticals (dominated by India, China, and African producers).
• The automotive sector is identified as a high-potential area for Korean firms like KIA and Hyundai to build production networks, leveraging existing low-cost intermediary production in Botswana (wiring harnesses) and Lesotho (seat leather).
• There is a strategic opportunity for Korea to support Africa's green transition and low-carbon economy goals. This includes potential investments in renewable energy and clean energy infrastructure, such as the $8.5 billion just energy transition partnership for South Africa.
• The paper recommends that the Korean government pursue formal trade or economic partnership agreements with African nations or regional economic communities (RECs), utilizing asymmetric trade liberalisation schedules where advanced partners offer lower rates and shorter schedules for tariff reduction.

APA

MATOLA, J. U., & VAN GASS, C. (2022). Developments in Africa’s Free Trade Area: Opportunities for Korean Investors. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2022/08/Occasional-Paper-336-matola-van-gass-1.pdf

Chicago

MATOLA, JOSEPH UPILE, and CONRAD VAN GASS. Developments in Africa’s Free Trade Area: Opportunities for Korean Investors. South African Institute of International Affairs, 2022. https://saiia.org.za/wp-content/uploads/2022/08/Occasional-Paper-336-matola-van-gass-1.pdf.

Wikipedia

{{cite report |last1=MATOLA |first1=JOSEPH UPILE |last2=VAN GASS |first2=CONRAD |title=Developments in Africa’s Free Trade Area: Opportunities for Korean Investors |publisher=South African Institute of International Affairs |date=August 2022 |url=https://saiia.org.za/wp-content/uploads/2022/08/Occasional-Paper-336-matola-van-gass-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{matola2022developments, author = {MATOLA, JOSEPH UPILE and VAN GASS, CONRAD}, title = {{Developments in Africa’s Free Trade Area: Opportunities for Korean Investors}}, institution = {South African Institute of International Affairs}, year = {2022}, month = aug, url = {https://saiia.org.za/wp-content/uploads/2022/08/Occasional-Paper-336-matola-van-gass-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }