This month marks seven years since the African Continental Free Trade Area (AfCFTA) agreement – a flagship initiative of the African Union’s Agenda 2063 – was signed by its first 44 member nations. Its goal remains the reshaping of the continent’s economic future by removing trade barriers, harmonising regulations and stimulating industrialisation.
The reality has not always matched the promise. While intra-African trade has grown in nominal terms, in 2023 it accounted for just 15% of the continent’s total trade (compared with 16.6% in 2017). That lags far behind intra-regional trade levels in the European Union (70%) and Asia (55%), and is a very long way from the World Bank estimate of 32% by 2035.
Non-tariff barriers continue to block the unlocking of AfCFTA’s full potential. In 2024 alone, the AfCFTA Secretariat reported over 120 of them, ranging from cumbersome customs processes to varying technical standards and licensing requirements. On a road trip last year along the West African coast, from Nigeria to Ghana via Benin and Togo, crossing the borders at Seme, Hillacondji and Aflao, I saw first-hand how customs procedures, long searches, administrative hurdles and officials looking for bribes imposed extra cost and time overheads on trucks moving goods between countries.
The infrastructure deficit also takes a toll. Moving goods across Africa is expensive because the roads are poor, the ports congested and the rail network inefficient. Anyone who has travelled in Africa will know how inadequate flight connections across the continent are. The African Development Bank estimates that over US$100bn a year is needed to close Africa’s existing infrastructure financing gap.
Meanwhile the continent’s fragmented currency landscape presents a further challenge, forcing businesses to rely heavily on the US dollar for crossborder transactions, which increases costs and exposure to FX risks. The introduction of the Pan-African Payment and Settlement System (PAPSS) may help here but adoption remains slow.
Growth in certain sectors hints at AfCFTA’s transformative power
Growth stimulant
Despite these challenges, AfCFTA has spurred growth in certain sectors and regions, hinting at its long-term transformative potential. Sparks of hope appear in areas such as Morocco’s automotive industry, which is now expanding deeper into West Africa, leveraging AfCFTA to penetrate new markets such as Côte d’Ivoire and Senegal. South Africa’s processed food and beverage sector has seen a steady uptick in exports to its neighbours, particularly Zimbabwe and Zambia.
Kenya and Uganda have strengthened their trade in dairy and horticultural products, facilitated by streamlined border processes, while Ghana’s cocoa-processing sector has successfully tapped into new markets in North Africa, increasing its value-added exports and growing its nascent chocolate industry.
The roll-out of PAPSS is an opportunity for fintech businesses in Nigeria and Kenya to expand crossborder payment services, reducing transaction costs and settlement times. PAPSS is designed to reduce reliance on foreign currencies, enabling real-time settlement in local African currencies. At the time of writing, 15 African central banks have signed up.
Major infrastructure projects, such as the proposed 1,000km Lagos-Abidjan highway and the 3,000km North-South Corridor rail expansion in southern Africa, would also cut transportation costs and enhance connectivity between major economic hubs. And the AfCFTA Secretariat continues to work with member states to streamline customs processes, harmonise product standards and eliminate non-tariff barriers.
This evolving trade landscape presents a unique opportunity
Unlockers of potential
For finance professionals, this evolving trade landscape presents a unique opportunity. There is a growing need for expertise in areas such as crossborder tax planning, regulatory compliance and strategic advisory. Accountants play a critical role in helping businesses navigate complex tax regimes across different jurisdictions, including managing VAT discrepancies, customs duties and double taxation treaties. Transfer pricing – especially in crossborder supply chains – has become a growing area of focus, as regulators tighten scrutiny on multinational operations within Africa.
Many African businesses, particularly SMEs, struggle to access trade finance. Finance professionals can help structure financing options, including letters of credit, guarantees and insurance products. They can also assist businesses in mitigating FX risks through hedging strategies, helping them navigate volatile currency markets. Accountants can provide SMEs with advisory support to optimise their supply chains, understand regulatory frameworks and adopt digital tools that simplify trade operations.
Accountants are central to turning AfCFTA’s promise into reality
As environmental, social and governance (ESG) considerations become embedded in trade agreements, finance professionals must ensure companies meet ESG standards, particularly in sectors such as agriculture, mining and manufacturing. Proper ESG reporting is also critical in attracting much needed foreign investment, which is increasingly focused on sustainable business practices.
Africa’s vision of a unified trade bloc remains a work in progress. While the much anticipated trade boom is yet to materialise, incremental successes in manufacturing, agribusiness and digital services highlight the long-term potential. AfCFTA’s true promise lies not just in policy but in execution – and finance professionals will be central to turning that promise into reality.
