From Risk to Reward: Strengthening Australia’s Trade in Emerging Markets

Adjoa Assan, Global Voices Fellow and Menzies Leadership Foundation Scholar, Y20, 2025.

Executive Summary

By 2050, one in four global consumers will live in Africa, and the African Continental Free Trade Area (AfCFTA) is projected to be worth $29 trillion per annum (Lawal, 2024). Despite this, Australia’s trade with Africa remains $12 billion per annum (DFAT, 2025), constrained by limited awareness, perceived risks and regulatory complexities. While mining companies have established investments and risk management practices, most small to medium enterprises (SMEs) lack support to navigate emerging markets, and Austrade’s Export Market Development Grants (EMDG) only fund marketing and promotional activities.

This paper recommends amending section 18(2)(a) of the Export Market Development Grant Act 1997 (Cth) (EMDG Act) and associated rules to include risk management activities as eligible expenses. Austrade would update the Round 4 EMDG Guidelines (2024) to provide examples, such as seeking advice related to environmental, social, security, health and governance risks. The change would cost an estimated $12.4 million per annum for Tier 1 grants and $44.7 million per annum for Tier 2 grants, a $15,000 increase per annum per grant, drawn from existing EMDG allocations. However, not all companies will claim the full $15,000 per annum on risk management. A two-year review would assess uptake, continuity of exports and value for money. While this measure empowers SMEs to expand confidently, potential risks include Australian businesses perceiving risk management as beyond the EMDG’s marketing scope, as well as the ongoing economic and political uncertainty in emerging markets.

Problem Identification

In 2024, two-way trade accounted for 45% of Australia’s Gross Domestic Product (GDP) and supported more than five million jobs in goods exports (Austrade, 2025a). Securing opportunities in high-growth regions is therefore vital to Australia’s trade diversification, competitiveness and long-term prosperity (Australian Government, 2017). Sub-Saharan Africa’s GDP is forecast to grow by 3.8% in 2025, outpacing global growth (2.8%) and other emerging markets (3.7%) (IMF, 2025a). Several Commonwealth countries in Africa are experiencing strong economic growth in 2025, including Ghana at 4% and Mauritius at 3% (IMF, 2025b). Botswana, for example, is highlighted as a desirable trade partner due to its stability and predictable regulatory environment (DFAT, 2022). However, Australia’s two-way trade with Africa remains at only $12 billion (DFAT, 2025), far below peer economies such as the United Kingdom (UK), whose trade already exceeds $101 billion (£50 billion) and is projected to reach $125 billion (£62 billion) by 2030 (Greater London Authority, 2025).

Australian mining companies have invested over $60 billion in Africa’s critical minerals, demonstrating the scale of opportunities (Satchwell, 2024). However, there are also significant risks involved. In 2024, the Tanzanian government seized a nickel deposit being explored by an Australian company (Coyne & Satchwell, 2025). While the company was awarded $138 million (US$90 million) in compensation, this highlights that Australia’s investment security in African countries is not guaranteed (Coyne & Satchwell, 2025). The significant presence of Australian companies in Africa means that threats to investments can negatively affect long-term profitability (Coyne & Satchwell, 2025). 

Australian companies face real and perceived barriers in African countries, including political instability and insecurity in the Sahel (Vines, 2025), unreliable transport and energy infrastructure (Dentons, 2024) and fragmented regulatory frameworks that complicate supply chains (Coyne & Satchwell, 2025). While the resources sector has developed tools to manage these risks, most Australian SMEs lack the support to do so (Commonwealth of Australia, 2018; Coyne & Satchwell, 2025). These challenges are compounded by limited literacy in Australia about African markets and their unique cultural, business and economic environments (Mickler, 2017). Together, these factors reinforce risk aversion, resulting in Australia's underrepresentation in high-growth regions.

Although the Government signed a Memorandum of Understanding (MoU) with the AfCFTA Secretariat in 2025 to promote Australia-Africa business partnerships, the Government has not implemented any targeted measures to give effect to this commitment. Austrade’s EMDG program is limited to marketing and promotional activities (Austrade, 2025b). It does not extend to risk management support, which is an essential requirement for sustainable export operations in emerging markets. Closing this gap is critical to help Australian businesses compete effectively, strengthen supply chain resilience and safeguard export earnings.

Context

Current Policy Landscape

The EMDG program is Austrade’s primary mechanism for supporting SMEs in marketing and promoting their goods and services globally (Austrade, 2025b). Delivered by Austrade, the scheme provides grants across four tiers, depending on whether the business is ready to export (Tier 1), exporting within existing markets (Tier 2), exporting to new key markets (Tier 3) or if the applicant is a representative body (Austrade, 2025b). Businesses can use EMDG grant funds on eligible expenses such as maintaining a representative in a foreign country, engaging consultants to undertake market research or seeking intellectual property rights overseas (EMDG Guidelines, 2024).

In Round 4 of the EMDG program, which closed in 2024, Austrade implemented changes to encourage exporters to diversify by specifying new key markets for eligibility under Tier 3 (Austrade, 2025c). The total program budget is about $104.5 million per annum (Austrade, 2025d). In 2026-27, there are 284 executed grant agreements in Tier 1 and 702 executed grant agreements in Tier 2 (Austrade, 2025d). The average annual grant value for Tier 1 is $28,744 and $48,738 for Tier 2 (Austrade, 2025d). 

Eligible Tier 3 markets were selected based on exporter surveys, customs data and the Southeast Asia Economic Strategy to 2040 (Austrade, 2025c), excluding Sub-Saharan Africa, Latin America and the Caribbean (see Table 1, Austrade, 2024e).

Region	New key markets within the Region
East Asia and the Pacific	Brunei Darussalam, Cambodia, China, Fiji, Hong Kong, Indonesia, Japan, Laos, Malaysia, Papua New Guinea, Philippines, Singapore, South Korea, Taiwan, Thailand, Timor-Leste, Vietnam
Europe and Central Asia	France, Germany, Italy, the Netherlands, the UK
Latin America and the Caribbean	Nil
Middle East and North Africa	United Arab Emirates
North America	Canada, United States
South Asia	Bangladesh, India
Sub-Saharan Africa	Nil

Table 1: New key markets identified for EMDG Round 4, Tier 3  

The program has demonstrated measurable benefits for existing exporters. In 2023-24, 54.5% of grantees reported higher export earnings, 62.5% reported increased turnover and 40.6% expanded their employee numbers (Austrade, 2025f). EMDG recipients also had higher export continuity rates compared to businesses that did not receive an EMDG grant. Sixty % of firms with an annual turnover of less than $250,000 exported goods for two consecutive years, compared to 45% of non-EMDG firms (Austrade, 2023g). Austrade (2025f) reported the top three expense categories by total payments for 2023-24 to be promotional literature and advertising material (55.5%), maintaining a representative in a foreign country (12.1%) and short trips overseas (11.2%). 

However, the Government has narrowly defined the program’s scope under the EMDG Act. Section 18(1) permits the Export Market Development Grants Rules 2021 (Cth) (EMDG Rules) to prescribe “eligible expenses” that businesses can claim under EMDG. Under section 18(2), eligible expenses must relate to either promotional activities to market eligible products in foreign countries or training to develop marketing skills.

Paragraph 30 of the EMDG Rules permits businesses to claim consultancy expenses, provided the consultant delivers market research or conducts promotional activities on behalf of the company. Broader advisory services, such as risk assessment, legal and regulatory compliance or supply chain analysis, are not eligible.

The Senate Foreign Affairs, Defence and Trade References Committee report (2018), including a submission from the energy company Woodside Energy, highlights that, with the right risk advice, Australian businesses can operate successfully in Africa and other emerging markets (Commonwealth, 2018). Recruiting local staff and engaging trusted consultants are cited as critical strategies (Burkert & Smith, 2021). However, the current legislative framework, with its restrictions on marketing-focused activities, leaves a structural gap for businesses that need tailored risk management assistance to enter complex environments.

Case Studies

The UK’s Growth Gateway Program offers a model for addressing these gaps. With a £49 million budget over six years (FCDO, 2025a), it connects UK firms with African markets by providing a Business Advisory Service (BAS), investor readiness support and local expertise (UK Government, 2025a). The program prioritises businesses with an environmental and human impact, such as OX Delivers (FCDO, 2025a). OX Delivers is a UK-based company that created the world’s first electric truck for Africa (OX Global, 2025). OX Delivers had difficulty finding suitable investors due to their uncertainty about the electric truck market in East Africa (UK Government, 2025b). Growth Gateway’s BAS helped the business raise £42.8 million (FCDO, 2025b) and secure a £125 million contract, which enabled expansion across East Africa and created 7,500 jobs (UK Government, 2025b). 

Similarly, Australian company Africar Group expanded AUTO24.africa, a leading online marketplace for used cars in Africa, to Côte d'Ivoire, Morocco, Rwanda, Senegal and South Africa (Australiance, 2024). AUTO24.africa collaborated with Australiance, a global talent advisory based in Australia, to grow its workforce by over 40 employees across five countries (Australiance, 2024). This approach mitigated operational and regulatory risks by ensuring local expertise and compliance required for success in each unique market.

Both cases highlight the importance of local knowledge and risk advisory elements, which are currently absent from EMDG.

The root cause of Australia’s limited trade engagement with Africa is not a lack of opportunity, but a lack of targeted risk management support for SMEs. To close this gap, policy must evolve beyond promotion and marketing to include structured risk-advisory measures that enable sustainable participation in high-growth regions.

Policy Options

To encourage exporters to expand into emerging markets, particularly in Africa, the Australian Government must ensure that Australian SMEs have access to practical risk management support that reduces perceived risks, addresses regulatory complexity and builds confidence. There are several ways the Government could achieve this:

1. Expand the list of new key markets under Tier 3 of the EMDG

Expanding the list of new key markets under Tier 3 of the EMDG Guidelines to include high-growth African countries such as Ghana, Botswana and Mauritius would incentivise businesses to consider African markets. Expanding the list advances the intent of the 2025 MoU with the AfCFTA Secretariat and aligns with the existing EMDG framework and budget. However, this change risks being perceived as superficial if not accompanied by targeted risk management support. Austrade may also be hesitant to implement it, given its reliance on the Southeast Asia Economic Strategy to 2040 and existing exporter survey data when determining priority markets.

2. Expand the definition of “eligible expenses” under the EMDG Act 

Amending the EMDG Act to include risk management expenses would directly address the barriers of risk and complexity that currently limit Australian participation in African countries and emerging markets. Financially supporting SMEs to access tailored advice would help more sustainable export operations and improve investor confidence. This option would increase Tier 1 and Tier 2 grants by $15,000 per annum, expanding their total annual budgets to $12.4 million and $44.7 million, respectively. The increase would be funded by reprioritising funds within the existing $104.5 million EMDG budget. At the same time, the Government may face opposition from stakeholders who argue that risk-related support falls outside EMDG’s promotional focus or overlaps with other mechanisms, such as Research and Development tax offsets.

3. Establish an Australia-Africa Growth Gateway

Austrade could operate a BAS modelled on the UK’s Growth Gateway initiative that focuses on increasing trade between Australia and Africa. The BAS could include connecting businesses with existing support and offering one-to-one advice to address specific business needs (FCDO, 2025b). However, allocating $99 million (£49 million) over six years to the advisory at the scale of the UK would be disproportionate, given Australia’s current two-way trade of $12 billion with Africa. A reduced budget of approximately $12 million over six years, proportionate to Australia’s current trade with Africa, could still achieve growth by focusing on digital resources and existing tools from the mining industry. This would involve investing in a range of expansion guides for different African markets and risk-management checklists adapted for SMEs (FCDO, 2025b; AAMEG, 2025). However, achieving long-term effectiveness and staffing would be challenging without the initiative being supported by a broader, coordinated Africa trade strategy. 

Policy Recommendation

Option 2, to expand eligible expenses under the EMDG Act, is recommended because it builds on the existing EMDG framework, ensuring exporters are not only marketing their products but also prepared to navigate the risks and complexities of operating in emerging markets. While intended to increase Australia’s trade with African countries, the Government should broadly draft the amendment to maintain flexibility as new opportunities arise in other regions.

To implement this, the Australian Government should amend section 18(2)(a) of the EMDG Act as follows:

18 Eligible Expenses

(2) A prescribed expense of a person must be an expense of the person in respect of:

(a) promotional activities undertaken for the purpose of marketing eligible products in foreign countries, and where a person is exporting to emerging markets or developing economies, risk management activities.

The Government should add the same language to EMDG Rules para 26(1)(a), and para 30 on consultants should be amended as follows:  

30 Consultants

This section covers the expense of engaging a consultant to undertake:

(a) research into the market in the foreign country for the eligible product; or

(b) promotional activities to market the eligible product in the foreign country; and

(c) risk management activities, where a person is exporting to emerging markets or developing economies.

By explicitly including risk management activities under consultant support, the amendment recognises that SMEs expanding into developing markets need expert, context-specific risk advice (Commonwealth of Australia, 2018), something the existing marketing-focused provisions of the EMDG Rules do not provide.

Austrade would need to consult on and release updated EMDG Guidelines, providing examples of “risk management activities”. These could include themes covered in the Australia-Africa Minerals & Energy Group’s (AAMEG) Business Checklist (2025), which assesses environmental, social, security, health and governance risks. Businesses would remain responsible for demonstrating that consultant expenses are eligible. 

While Austrade does not preclude Tier 1 and Tier 2 recipients from exporting to emerging markets beyond those listed in Attachment 1 in the EMDG Guidelines (2024), the Government should consider revising the list to include high-growth African economies such as Ghana, Mauritius, and Botswana. Regularly updating this list would ensure the program reflects current trade opportunities and strengthen the impact of expanding eligible expenses to include risk management activities, guiding businesses toward viable emerging markets.

Cost and measures of success

The estimated cost is an additional $15,000 per annum per Tier 1 and Tier 2 grant, consistent with consultancy benchmarks in the EMDG Guidelines (2024), which allow up to $30,000 in consultant expenses across a two-year grant period without requiring a formal contract.

Calculations are based on the additional funds available to Tier 1 and Tier 2 businesses, which represent the EMDG categories eligible to expand to Sub-Saharan African countries. However, not all companies will claim the full $15,000 per annum on risk management because it is an additional eligible expense category.

This would raise the average Tier 1 grant from $28,744 to $43,744 per annum and the Tier 2 grant from $48,738 to $63,738 per annum (Austrade, 2025d), a 52% increase for Tier 1 and a 31% increase for Tier 2. With 284 Tier 1 grants and 702 Tier 2 grants executed in 2026-27 (Austrade, 2025d), Austrade should increase the Tier 1 budget from $8.2 million to $12.4 million and the Tier 2 budget from $34.2 million to $44.7 million. Funding would come from within the existing $104.5 million EMDG allocation through reprioritisation, not new expenditure.

Austrade should review the amendment after two years, assessing uptake of risk management support, export continuity in Sub-Saharan Africa and other emerging markets, growth in export earnings and improvements in navigating regulatory environments. Austrade would demonstrate success through more Australian SMEs exporting sustainably to African markets and broader diversification of Australia’s trade profile.

Measurement	Tier 1 Value	Tier 2 Value
Number of grants (2026-27)	284	702
Current average grant	$28,744	$48,738
Current budget	$8,163,296	$34,214,076
Proposed increase to average grant value	+$15,000	+$15,000
New average grant	$43,744	$63,738
New budget	$12,423,296	$44,744,076
% Increase	52%	31%

Table 2: Cost to expand eligible expenses to risk management activities 

Barriers and Risks

Barriers

Australian businesses, outside the mining sector, have limited experience in African markets (Commonwealth of Australia, 2018). Political and regulatory uncertainty, infrastructure constraints and unfamiliar business environments remain significant barriers to exporters expanding to the African continent (Vines, 2025; Dentons, 2024). However, Austrade can follow the example of the UK’s Growth Gateway program and share success stories through its communication channels to demonstrate the value of risk-mitigation activities. Austrade would facilitate uptake and provide a knowledge base for other SMEs seeking to expand into emerging markets and developing economies.

Social and Economic Risks

Two key risks relate to expanding eligible expenses: social and economic. Socially, some businesses may perceive risk management activities as being outside the intended scope of the EMDG program, which could lead to potential stakeholder dissatisfaction. However, section 3 of the EMDG Act emphasises supporting the “creation, development and expansion of foreign markets,” which includes managing risks. Gaining feedback through the EMDG review mechanism can address concerns. 

Economically, incentivising exports to emerging markets and developing economies exposes businesses to unpredictable market, political and regulatory conditions (Coyne & Satchwell, 2025). Additional funding may not fully mitigate these risks, and some companies may still encounter operational or contractual challenges. Nevertheless, structured guidance from consultants, funded by EMDG, equips businesses to begin managing these risks, which is essential for achieving long-term export growth and trade diversification.

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The views and opinions expressed by Global Voices Fellows do not necessarily reflect those of the organisation or its staff.