Exploring the Promise, Early Successes, and Complex Challenges of the African Continental Free Trade Area as It Aims for Economic Integration and Sustainable Prosperity
According to estimates by the World Bank, if the African Continental Free Trade Area
(AfCFTA) were fully implemented by 2035, it could boost the continent’s income by $450
billion and lift about 30 million people out of extreme poverty. Additionally, in intra-African
could be boosted by as much as 50% if AfCFTA succeeded in reducing trade barriers.
Among the early signs of progress that have been made are the establishment of the continental
body’s Secretariat in Accra, Ghana, and the progressive rollout of AfCFTA’s Guided Trade
Initiative (GTI). The GTI is a comprehensive document that guides countries’ trade among
themselves. Today, the question that begs an honest answer is whether, with all African countries
except one (Eritrea) having signed on, is AfCFTA delivering on its promises.
What is the African Continental Free Trade Area?
Launched on 1st January 2021, AfCFTA came with the ambitious aim of building the largest
single market in the world, bringing together the 55 African countries whose combined GDP is
estimated to be over $3.4 trillion. The goal of this landmark agreement is to increase intra-
African trade by eliminating trade barriers and boosting job creation through industrialization.
The AfCFTA mandate also entails boosting intra-African trade by eliminating trade barriers. In
particular, AfCFTA is to boost commerce in value-added production across all sectors of the
continent’s economy. AfCFTA will help the establishment of a regional value chain that
facilitates job creation and investment. The effective implementation of the AfCFTA objective
has the potential to enhance Africa’s competitiveness both in the medium and long term.
AfCFTA can significantly transform the continent economic landscape The creation of a single
market aims to help Africa overcome the limitations typical of small national markets, attract
investment, and enable businesses to scale up and compete on a global scale more effectively.
The Vision Behind AfCFTA
The African Continental Free Trade Area formed a key component of the African Union’s
Agenda 2063, “The Africa We Want.” Approved in 2012 by the 18th Assembly of Heads of
State and Government, ordinary session held in Addis Ababa, the AfCTA contains the Action
Plan for Boosting Intra-African trade that would help promote socio-economic growth and
development on the continent. The AfCFTA seeks to raise Africa’s trading position by having
one voice during international trade negotiations.
By bringing together the 55 nations that make up the AU, the AfCFTA became the largest free
trade area globally. It also brings together eight Regional Economic Communities, creating a
single market for Africa. The AfCFTA is an ambitious trade agreement with a comprehensive
mandate in critical areas of Africa’s economy including, among others, protecting investments
and ecommerce.
Early Success Stories
Despite the persistence of tariff and non-tariff barriers, Africa has made significant progress in
terms of economic integration. Historically, these barriers have hindered business
competitiveness, especially for startups and smaller businesses with less funding and fewer
resources, from engaging in international commerce.
Compounding matters is the reality that nearly half of the member states of the African Union
have populations of less than 10 million people. The implication is that many have small
domestic markets, which tend to limit the scale at which trade and businesses can grow. Without
access to an integrated, larger market, firms in Africa, particularly small and medium enterprises
(SMEs) and startups, struggle to attract investment and achieve economies of scale that will
enable them to compete on the global scene. Historically, the fragmented nature of the African
economy has reduced trade efficiency, increased transaction costs, and restricted economic
diversification.
Fortunately for the continent, AfCFTA is gradually dismantling these barriers and challenges,
opening the window and opportunity for intra-African trade to thrive, primarily through the
exchange of more value-added products. This will be a shift from the traditional African reliance
on commodities trade. The World Bank Group notes that if effectively implemented, the
AfCFTA initiative could be the catalyst needed for Africa’s structural transformation. This would
be driven by a growing African population projected to reach 1.7 billion by 2030.
To actualize this vision and goal, some African countries have taken initiatives to simplify
customs procedures and controls to ease restrictions and boost intra-African trade.
Case Study 1: Ghana Single Window
The Ghana Single Window (GCNet) system streamlines the country’s import clearance process
by facilitating the electronic submission of customs documents and their validation. GCNet
leverages electronic data exchange to streamline procedures, thus improving trade operations
efficiency by reducing process delays. The goal of GCNet is to enhance the country’s position as
a regional investment hub.
Key features of GCNet include facilitating electronic information submission, data validation,
and document standardization. Today, all the customs regulatory requirements are done using a
single administrative document. By enabling electronic validation and digitizing the customs
process, the GCNet aims to minimize delays typical of manual document processing.
Case Study 2: Nigeria Waives Import Tariffs
Africa’s goal of achieving a unified market got a major push when the Nigeria took the decision
to waive 90% of tariffs on goods traded within the continent. As the most populous country in
Africa, the decision by Nigeria promises to accelerate the impact of the AfCFTA, transforming it
into a tangible force for continental integration.
For investment and trade opportunities in Nigeria, the near-zero duty policy comes with far-
reaching implications. By increasing market access and lowering trade costs, the move by the
West African economic powerhouse is expected to not only boost intra-African trade but also
diversify the country’s heavily oil-dependent economy. This will be achieved through
stimulating growth in other industries such as agribusiness, manufacturing, and digital services,
and also transforming Nigeria into a thriving continental hub.
The benefits of the new tariff policy by Nigeria are having a real impact on the ground. Already,
Lucky Fibers, a Tolaram Group subsidiary, has shipped hair products from Nigeria’s to Kenya
under the auspices of the African Continental Free Trade Area (AfCFTA). The Lagos-based
Lucky Fibers is a manufacturing company that produces carpets, rugs, and hair products.
Case Study 3: Pargo (South Africa) Expands to Egypt
Thanks to simpler intra-Africa trade regulations, Pargo, a South African tech startup, has
expanded into Egypt after securing $4 million in funding from a consortium led by 3Capital
Ventures, UW Ventures, SAAD Investment Holdings, and Endeavor. The funding is expected to
boost expansion into the rapidly expanding Egyptian e-commerce space. It will further enhance
Pargo’s network and logistics, enabling the South African company to meet rising demand for
convenient and affordable ecommerce solutions.
In Egypt and across AfCFTA member countries, the need for affordable, efficient, ecommerce
delivery services is growing, with major and global e-commerce platforms such as Amazon and
Jumia driving the demand for online shopping. Noon, the leading fashion and lifestyle company
became the first major platforms to leverage Pargo’s ecommerce services in Egypt greatly
enhancing convenience in shopping.
AfCFTA’s Biggest Challenges
Despite these advances and achievements, growth in intra-African trade has only marked modest
growth, from about 14% in 2021 to 17% in 2024. This falls short of the ambitious 50% target set
by the African Continental Free Trade Area for 2030. This significant gap between outcome and
aspiration reveals the depth of the kind of challenges that AfCFTA must address if the expected
transformative potential is to be realized.
A. Regional Economic Communities Trade Barriers
Across Africa, efforts to boost trade have been limited for many years as governments often erect
trade barriers through tariffs as they seek to defend their markets from external competition. This
regional fragmentation leads to overlapping trade regimes such as the East African Community
(EAC), Economic Community of West African States (ECOWAS), and the South African
Development Cooperation (SADC). Each of these trading blocs has its own rules of origin,
tariffs protocols, and trade facilitation, which often lead to a costly and complicated regulatory
environment.
This has made it more expensive to trade with near neighbors than with countries that are much
further afield. In addition, regional barriers affect the volume of trade within Africa, which
further strengthens the need for AfCFTA.
B. Infrastructure and Logistics
Digital and physical connectivity gaps within the continent raise trade costs by nearly 60%.
There are gaps in infrastructure on the continent, creating persistent bottlenecks in energy
supply, digital connectivity, and transportation networks. In addition, foreign exchange
constraints add to the transaction costs. In many regions of Africa, digital payment infrastructure
remains underdeveloped, constraining digital services and ecommerce growth.
For African small and medium enterprises (SMEs), these limitations are particularly
disadvantageous as SMEs constitute over 80% of the continent’s businesses. Such enterprises
find themselves largely excluded from formal cross-border trade as their sizes cannot absorb the
high compliance and transportation costs, thus reducing their potential to contribute to intra-
African trade. Despite initiatives like AfCFTA’s Program for Infrastructure Development in
Africa, actual realization is greatly hampered by funding constraints and process coordination
challenges.
Besides digital challenges, Africa also faces other trade barriers. Many roads are in poor
condition, while ports and railways are inefficient, making trade expensive. For example,
shipping goods from Lagos in Nigeria to Nairobi in Kenya can cost more than Lagos to China
and even take longer.
C. Non-Tariff Barriers
While tariff reductions across the continent have progressed, a major challenge remains non-
tariff barriers, which now account for about 60% of intra-African trade costs. Barriers in question
include administrative bottlenecks, divergent product standards, inconsistent customs
procedures, and duplicative certification requirements.
Businesses that operate across different countries or trade blocs often face particular challenges
in meeting such overlapping requirements. This leads to increased costs, delayed shipments, and
limited market access. While the AfCFTA has a Non-Tariff Barriers Reporting and Monitoring
System, its success in resolving issues remains slow, and its enforcement mechanisms are still
limited.
Other non-tariff barriers include rampant corruption at borders, inconsistent processes, and
excessive paperwork. It is not a surprise to find truck drivers transporting goods stuck for days at
some border crossings due to bureaucratic delays.
D. Political & Economic Differences
The existing geopolitical landscape is another obstacle for the African trade body. Some African
nations are still hesitant to fully commit to AfCFTA as they fear economic dominance by bigger
and more stable economies such as South Africa, Nigeria, Egypt, or Kenya. Additionally, in
certain regions, ongoing political instability threatens the free movement of services and goods,
which tends to slow down AfCFTA implementation.
To compound matters, Africa is yet to agree on a common currency, with some using the French
Franc, others the Dollar or Euro, but a few using local currencies. There is no common
denominator when trading between AU member states.
E. Slow Implementation
Despite the great expectations and high-level political momentum among AU countries around
the AfCFTA promise, the ultimate success of this continental trade body will hinge on more than
simply ratifying, but also on the full implementation and compliance with the Non-Tariff
Barriers Reporting and Monitoring System of AfCFTA. Therefore, it will also be critical to
invest in the necessary political and policy enablers.
F. Fragmented Regulatory Framework
One major hurdle facing the AfCFTA is a fragmented regulatory framework. Many African
countries maintain different trade policies, and aligning all of them under one cohesive
framework is a daunting undertaking. To create a unified African market, e-commerce, domestic
investment protection, and intellectual property laws must be standardized.
What Needs to Happen Next for the AfCTA?
The African Continental Free Trade Area was launched with the ambitious goal of uniting the
continent into a powerful simplified trading bloc. It was to herald greater market opportunities
from increased intra-Africa trade, more investment, greater value addition in products that would
boost productivity growth. This can potentially lead to better and more jobs with increased social
inclusion for all Africans.
To realize the full AfCFTA potential and associated benefits, much more must be done. This
includes economic and political reforms and, critically, investments in trade infrastructure,
transport logistics, and corridors. All these measures must be backed by an improved business
climate in Africa.
Other key actions that are needed to ensure AfCFTA success include negotiating and finalizing
outstanding trade protocols, mainly those that deal with digital investment and trade. It will also
be paramount to develop and implement robust commerce facilitation measures that can help
reduce trade costs. AfCFTA must also strengthen institutional frameworks, ensure that private
investors get a conducive environment, and foster state-state cooperation.
Perhaps the most challenging step for AfCFTA, considering the total member countries of the
trade body (the world’s largest), is to ensure they speak with one voice. This will be particularly
vital to strengthen the continent’s bargaining power in trade negotiations. It will also redefine the
boundary of fair trade and lead to a more inclusive global process.
Conclusion
In its early years, the African Continental Free Trade Area has undeniably made some progress.
This is particularly in promoting regional industrialization, reducing tariffs, and attracting private
investment. Although the African trade body has established a foundational framework,
translating the protocols into economic reality will require addressing some underlying structural
constraints. African governments, by focusing on infrastructure integration, value addition,
regulatory harmonization, and completing outstanding critical negotiations, can accelerate the
realization of the transformative potential that AfCFTA holds.
Ultimately, the success of AfCFTA will depend on the coordination of diverse economies and
the political will of all member governments. The AfCFTA agreement has created an opportunity
for greater African integration. However, the implementation of the AfCFTA must now be
pursued with equal, if not greater ambition, than was seen during signing of the agreement in
Addis Ababa in 2012. The AfCFTA is a genuine game-changer, but progress is certainly slower
than many had hoped. If done right, AfCFTA could transform Africa’s economy—but the hard
work is just beginning.
For more insights and updates on global business trends, visit nextbusiness24.com
Written by : Sammy Mwatha, Expert Author
Sammy Mwatha is a skilled content writer who blends business, tech, health, and lifestyle topics with analytical, story-driven insights.
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