With its rapidly rising middle class and growing population (which currently totals around 1.4 billion), Africa is emerging as a major economic actor, generating a combined GDP of approximately USD 3.1 trillion (2023). African consumer markets are expanding, too, as is the continent’s young labour force; and the bulk of future global job creation is expected to take place in Africa, albeit mainly in the informal sector. Amid broader geopolitical shifts, the strengthening and reconfiguring of economic relations between the African Union (AU) and the European Union (EU) has become increasingly important, not least as relations are still widely seen as asymmetric and unsustainable. Contrary to common perceptions, the EU remains Africa’s most important economic partner by far, as data on EU–AU economic relations show. Thus, it is well positioned to advance the move towards a more balanced partnership – one that is beneficial for both sides.

The EU: Still Africa’s No. 1 Trade Partner…

Notwithstanding all the attention being paid to emerging powers, the EU remains Africa’s most important trading partner by far, with an overall trade volume of around USD 367 billion in 2024, according to the International Monetary Fund (IMF). For Africa, sustaining and deepening trade with the EU is essential in order to generate crucial revenue flows and support sustainable debt management. Moreover, such an approach could act as a key driver of socio-economic transformation. While China’s share in Africa’s trade volume has increased somewhat in recent years – from 13 per cent in 2016 to 15 per cent in 2024 (totalling around USD 207 billion) – the EU’s share has remained relatively stable at 26–29 per cent. Of the EU member states, France and Italy are the two most important trading partners, with a trade volume of around USD 61 billion and USD 58 billion in 2024, respectively, followed by Spain (USD 56 billion) and Germany (USD 50 billion). Other important partners include the United States and India, each accounting for almost 5 per cent of Africa’s total external trade, as well as the United Arab Emirates (4%), Saudi Arabia and Turkey (2% each). Overall, intra-African trade remains low, at roughly 16 per cent of Africa’s total trade.

At the country level, the EU’s principal trading partners in Africa are the continent’s largest economies – South Africa, Morocco, Nigeria, Egypt and Algeria – as well as other North African states that are geographically closer to Europe, particularly Tunisia and Libya. Exports from South Africa and Morocco to the EU are relatively diversified at the product level, with both machinery and automobiles accounting for large shares. By contrast, many African economies have highly concentrated exports to countries outside the continent: mineral fuels and oils (e.g., Nigeria and Angola), agricultural products (cocoa in the case of Ghana and Côte d’Ivoire) and raw materials (copper from the Democratic Republic of the Congo). 

…and Top Foreign Direct Investor

As in the case of trade, the EU tops the list of the most important sources of foreign direct investment (FDI) in Africa. According to IMF data,¹ its FDI stock reached USD 254 billion in 2023, followed by the United States (USD 57 billion) and the United Kingdom (USD 56 billion), while China (including Hong Kong) is lagging with around USD 52 billion. Other important investors include countries such as the United Arab Emirates, Singapore and India.²

 

 

It is noteworthy that high growth rates and significant fluctuations in FDI stock data are heavily influenced by individual mega-projects, such as the USD 6 billion Kaminho oil project in Angola, developed by the French company TotalEnergies. While, overall, FDI greenfield projects are dominated by sectors such as energy and gas, construction and extractive industries, Chinese FDI is more diversified, extending to sectors such as food processing, pharmaceuticals and motorcycle manufacturing.

Bilateral Aid in Decline

Despite flourishing trade and investment relations, net official development assistance (ODA) from the largest European donor countries to Africa has declined in recent years, according to OECD data, after having peaked in relative terms at the onset of the COVID-19 pandemic. In particular, aid flows from EU institutions have almost halved, falling from just below USD 10 billion in 2020 to USD 5.4 billion in 2023. Similarly, Germany’s ODA disbursements decreased by roughly one third from USD 6.4 billion to USD 4.6 billion and Italy’s bilateral aid to African countries consistently remained well below USD 1 billion during the period 2020–23. By contrast, France’s aid disbursements to Africa were comparatively stable – at around USD 4 billion – during the same period. Outside the EU, the United Kingdom has drastically reduced its ODA disbursements, which fell from well over USD 4 billion before the COVID-19 pandemic to around USD 1.5 billion in 2023, while aid flows from the US remained above USD 15 billion until the Trump administration took office in early 2025.

Owing to the cuts in bilateral ODA announced this year, aid flows to sub-Saharan Africa are projected to decline by up to 28 per cent compared to 2023. This reduction, which is expected to affect the poorest recipient countries most severely, is already fuelling discussions about strategies for reducing aid dependency.

Shaping Economic Ties: Three Key Areas

Against the background of the EU’s continued role as Africa’s most important trade and investment partner and the decline in bilateral aid flows from European donors, we examine the current debates on how economic ties between African countries and the EU should be shaped in the future, thereby focusing on three policy areas. First, since many African countries continue to rely heavily on exports of raw materials, which limits job creation and necessitates the import of capital goods, the EU should increasingly take into account African interests and development priorities by supporting the local processing of those commodities. For example, African countries export critical raw materials to China for processing, which reinforces the latter’s globally dominant position in this sector. Promoting local value added in African producer countries could not only support Africa’s industrialization but also contribute to the EU’s own diversification efforts to reduce its dependence on China. 

Second, the EU should articulate a clear policy strategy to support the establishment of the African Continental Free Trade Area (AfCFTA), which aims to boost intra-African trade by creating a unified market for goods, services, capital and people. The EU’s current fragmented policy of concluding Economic Partnership Agreements (EPAs) with individual African countries and regional groupings has been criticised for undermining the AU’s bid to develop a single African market. The AfCFTA has the potential to foster the export diversification of African economies, thereby supporting regional integration and the aforementioned local value-added efforts, and increase the continent’s combined real income by an estimated 7 per cent by 2035. To promote the establishment of the AfCFTA, the EU should re-evaluate its current trade policy towards Africa and offer concrete measures focused on reducing non-tariff barriers, encouraging European investment and improving transport and customs systems. In this way, it could demonstrate its commitment to Africa’s economic growth and development.

Third, other initiatives to strengthen economic ties between the AU and EU should include creating frameworks for technology transfer, particularly in the field of digital technologies. Building on the existing, albeit limited forms of digital cooperation, such as Global Gateway’s digital component, the EU should advance mutually beneficial digital partnerships with Africa. Such partnerships could involve increasing European investment in African digital infrastructure (such as subsea cable networks and data centres), boosting digital development and connectivity, and reducing the vulnerability of African economies to external shocks. In the area of digital governance, the EU could offer valuable insights to help the AU achieve the ambitious goal of creating a digital single market based on its own (contested) experience in harmonising digital markets and regulating tech companies. 

The intensifying competition in today’s multipolar world underscores the strategic need for the EU to reinforce its role as a credible and long-term partner of the AU. While China’s significant presence in Africa’s infrastructure, mining and digital sectors presents a challenge to the EU, efforts to enhance trade and cooperation with Africa should not be driven merely by the desire to counter China’s deepening engagement with the continent, as this would fuel criticism that Brussels was adopting a neo-colonial approach and focusing excessively on the benefits it might reap. For the EU, the cultivation of deeper economic cooperation with African countries on the basis of shared interests is vital, not least owing to the significant potential in areas such as resilient supply chains and digital infrastructure as well as in further inter- and intra-regional trade integration.

Mark Schrolle is Information and Data Manager in the research division Africa and Middle East at the German Institute for International and Security Affairs (SWP).

Ann-Marie Verhoeven is Research Assistant at Megatrends Afrika at the German Institute for International and Security Affairs (SWP).

¹ Note that the IMF data for FDI differ from UNCTAD figures – see World Investment Report 2025, p. 32.

² The comparatively large FDI stock attributed to EU member states such as the Netherlands and Luxembourg as well as countries like Singapore is due in part to indirect investment being channelled through those jurisdictions by ultimate owners located elsewhere.