The OECD’s new working paper, Aid for Trade at a Crossroads, warns that the initiative risks irrelevance unless it evolves to address climate change, digitalization, and inequality. Originally designed to strengthen trade capacity in developing countries, aid for trade has financed infrastructure, modernised customs, and supported entry into global value chains. However, the current landscape is more complex, shaped by geopolitical tensions, competing donor priorities, and pressing global challenges. The report stresses that aid for trade must be reimagined as “Aid for Trade 2.0,” grounded in inclusive partnerships, sustainable financing, and alignment with global development goals.
Key gaps include stagnant funding shares, uneven distribution of resources, and limited integration of climate and environmental priorities. The analysis highlights three transformative forces—climate action, digitalization, and social inclusion. Without climate-smart trade support, developing nations risk exclusion from evolving global markets; without digital infrastructure and literacy, the digital divide will deepen; and without deliberate inclusion, trade could exacerbate inequality. The paper further warns that trade is increasingly shaped by geopolitics, with developing countries under pressure to align with rival blocs. To remain relevant, aid for trade must expand beyond donor-recipient relationships, bringing in private sector actors, regional institutions, and multilateral development banks.
Aid for Trade 2.0 presents major opportunities for Africa by aligning trade support with climate-smart strategies, digital inclusion, and equitable growth. Supporting African exporters to decarbonize and meet stricter environmental standards will be critical to accessing global markets, while investments in renewable industries can unlock new growth pathways. At the same time, expanding broadband access, improving digital literacy, and strengthening cybersecurity would enable SMEs and entrepreneurs to participate more fully in e-commerce and digital platforms. These shifts, if paired with targeted programs for women, youth, and marginalized groups, could make trade a driver of inclusion rather than inequality.
Beyond economic competitiveness, a reimagined aid for trade framework could also enhance Africa’s resilience and long-term development. Stronger mechanisms would help African economies diversify and reduce vulnerability to global power rivalries, while innovative financing tools such as blended finance and risk-sharing could mobilize much-needed resources for trade and infrastructure projects. Crucially, aligning aid for trade with the African Continental Free Trade Area (AfCFTA), the Paris Agreement, and the Sustainable Development Goals (SDGs) would reinforce Africa’s integration agenda and position the continent as an active shaper of sustainable globalization.