African small and medium-sized businesses are being urged to move beyond domestic markets and build the regulatory, logistical and commercial capacity needed to take advantage of the expanding continental market under the African Continental Free Trade Area (AfCFTA).
Joyce Letswalo, head of the Market Access Division at the AfCFTA Secretariat, said businesses must actively research potential markets, understand import requirements and use the tools and networks being developed to support cross-border trade.
“The businesses out there need to be aware that the legal regime, the AfCFTA, is available. They need to learn and do research, and they can use tools such as the e-Tariff book to go search for their products of interest and sectors of interest and now start to revise the strategies of how they are going to use that to their advantage,” Letswalo said.
The advice comes as the AfCFTA moves into an implementation phase in which businesses are increasingly expected to use the agreement independently rather than rely primarily on government-led trade initiatives.
For SMEs, access to preferential tariffs is only one part of the equation. Businesses must also meet national regulatory requirements, understand the conditions for importing into destination markets and establish relationships with buyers and suppliers.
Letswalo said companies may need to register as traders, importers or exporters and determine the compliance requirements applicable to their products.
“They need to also engage the customer on the other side, the importing country, to also learn about what are the requirements to import,” she said. The Secretariat is also relying on trading companies to help smaller businesses overcome some of the practical constraints involved in moving goods across borders.
More than 19 AfCFTA trading companies have been notified, according to Letswalo. The companies are intended to aggregate smaller businesses and provide support ranging from market information and access to finance to compliance and transportation.
“They are assisting in ensuring that there’s market flow, the information flow, there’s also support,” Letswalo said.
The aggregation model is designed to address the scale constraints faced by smaller companies, which may have the capacity to manufacture a product but lack the resources or expertise to organize its movement across multiple borders.
“Most, you might find their specialty is how to produce a product,” Letswalo said. “But beyond ensuring it moves across the continent. They may not have the capacity.”
The AfCFTA is also encouraging businesses to use private-sector platforms to identify commercial opportunities and establish contacts across African markets.
Letswalo pointed to Biashara Africa and the Africa Trade Fair as platforms through which companies can meet potential customers and partners.
The shift toward private-sector-led trade follows earlier guided trade initiatives designed to demonstrate how the agreement could work in practice. “The 2022 moment was a catalyst. It was to say, this is the regime and let’s use it. And this is how in practical terms we can use it,” Letswalo said.
The commercial opportunity extends beyond selling finished goods. Businesses can use the continental framework to source inputs from other African countries and develop regional supply chains.
A company could, for example, source shea butter, packaging and other inputs from different African markets before producing a finished product that qualifies as African-origin.
That model could support greater intra-African sourcing while creating opportunities for manufacturers to add value to commodities produced on the continent.
The Secretariat has identified agro-processing, automotive products, pharmaceuticals, transport and logistics among priority areas for businesses to monitor under the AfCFTA framework.
Businesses are also being encouraged to use the continental payments and settlement infrastructure and the non-tariff-barrier reporting mechanism as part of their cross-border operations.
“The payments and settlement system that is ensuring that it’s easier to work on finances across the continent,” Letswalo said, while also pointing to the mechanism supporting businesses that encounter non-tariff barriers.
For SMEs, the emerging architecture means that entering another African market increasingly requires more than simply identifying a buyer. Companies need to understand tariff treatment, product standards, customs procedures, logistics, payments and local market requirements.
The AfCFTA’s implementation phase is consequently creating a broader commercial framework for companies that are able to navigate those requirements and establish supply and distribution relationships across borders.
