For Africa’s small businesses, the promise of a single continental market will mean little if selling across borders remains expensive, slow and complicated.
A business may have a product that customers want in another African country, yet still face high transport costs, lengthy customs procedures, different regulatory requirements and difficulties receiving payment. For many small firms, these barriers can make an otherwise promising regional market too costly or difficult to pursue.
That is the practical test facing the African Continental Free Trade Area (AfCFTA) as countries work to turn the agreement into a functioning single market. Its success will ultimately depend on whether businesses can move goods more easily, reach customers beyond their home markets and compete on better terms across the continent.
Wamkele Mene, Secretary-General of the AfCFTA Secretariat, says the agreement must deliver those practical gains, particularly for small and medium-sized enterprises.
Speaking at the Project Management Institute Global Summit Series in Cape Town, Mene said the success of AfCFTA should translate into tangible benefits for businesses, particularly SMEs.
“For the AfCFTA, success must translate into tangible benefits for businesses, particularly SMEs,” Mene said.
Those benefits include lower trade costs, fewer administrative barriers and access to new markets across the continent.
Making cross-border trade easier
For an SME, these issues can determine whether an opportunity in another African market is commercially worthwhile.
A company may be able to produce competitively at home but struggle to sell abroad because of the cost and complexity of moving goods across borders. Delays at customs, paperwork, regulatory requirements and payment challenges can all add to the cost of doing business.
Mene said African countries therefore need to support the AfCFTA with reforms that make cross-border trade simpler and more efficient.
He pointed to modern customs systems, digital trade tools and efficient payment solutions as important elements of that process.
The focus is on making the agreement work at the point where businesses actually trade, rather than leaving its benefits at the level of policy and agreements.
Faster customs procedures can reduce delays and costs, while digital systems can make it easier for businesses to complete documentation and comply with requirements in different markets. Efficient payment systems can also help businesses receive money from customers across borders more easily.
For smaller companies with limited cash and administrative capacity, such improvements can make a significant difference to whether they attempt to enter regional markets.
Opening markets for African businesses
AfCFTA offers businesses the prospect of reaching customers beyond their domestic markets without facing the same level of barriers that have historically constrained intra-African trade.
For SMEs, a larger market can create opportunities to increase sales, expand production, invest in equipment and create jobs.
It can also allow businesses to source inputs from other African countries and build relationships with suppliers, distributors and customers across regional markets.
But access to a larger market does not automatically translate into commercial success.
Businesses still need reliable transport networks, efficient ports and border crossings, predictable regulations and payment systems that allow transactions to be completed without unnecessary costs and delays.
That is why implementation will be critical to determining whether the opportunities created by AfCFTA are taken up by businesses on the ground.
Digital economy adds another opportunity
Mene also pointed to the digital economy and artificial intelligence as areas that could create opportunities for investment, innovation and job creation.
Africa’s young population, he said, will have an important role in shaping that future.
Digital technologies are already changing how businesses find customers, market products, manage operations and access services. For SMEs, greater use of digital tools could make it easier to identify opportunities in other markets and participate in regional value chains.
But businesses will need more than technology to take advantage of those opportunities.
They will also need an environment in which goods, services and payments can move efficiently across borders.
The SME test
The emphasis on SMEs raises a broader question about how widely the benefits of AfCFTA will be distributed.
Large companies with established regional operations may have greater resources to navigate different markets. Smaller businesses often have less room to absorb additional costs, delays and regulatory complexity.
Making cross-border trade simpler could therefore determine how many SMEs are able to move beyond their domestic markets and participate in the wider African economy.
For policymakers, the task is to ensure that reforms at borders, in customs administration, digital systems and payment infrastructure translate into changes that businesses can actually feel.
For businesses, the opportunity is potentially significant. A customer in another African country could become part of a company’s market rather than remaining out of reach because of the cost and complexity of cross-border trade.
But that opportunity depends on whether the barriers come down.
Lower trade costs, fewer administrative barriers and easier access to customers across borders would be critical to turning AfCFTA from a continental trade framework into a practical source of growth for African SMEs.
For Africa’s small businesses, the promise of AfCFTA will ultimately be judged by a simple question: has trading across the continent become easier, cheaper and more commercially viable?
