Former Ethiopian Prime Minister and Board Chair of TradeMark Africa, Hailemariam Desalegn Boshe, says while the African Continental Free Trade Area (AfCFTA) is a groundbreaking initiative, trade agreements alone cannot unlock the full potential of intra-African commerce.
He urged African nations to move beyond signing agreements and focus on dismantling the structural barriers that continue to limit trade growth across the continent.
Speaking at a lecture organized by the AfCFTA Secretariat in Accra on the topic ‘AfCFTA as a Catalyst for Agenda 2063: Seizing Opportunities in a Changing World,’ Hailemariam called for urgent action to build industrial capacity, modernize trade infrastructure, and streamline regulations to ensure African nations fully benefit from the AfCFTA.
Intra-African Trade Remains Low Despite Growth
Despite the AfCFTA’s potential, intra-African trade remains at just 15% of total African trade, significantly lower than Asia’s 50%. Between 2017 and 2023, Africa’s total merchandise exports surged by 200%, but intra-African trade increased by only 27%, highlighting the continent’s reliance on external markets.
“For decades, Africa has supplied the world with gold, oil, coffee, cocoa, and other raw materials, only to reimport them as finished products at significantly higher costs,” Hailemariam stated. “This is a structural trap keeping us at the lower end of global value chains. If we are consuming these products, why aren’t we adding value ourselves?”
A recent International Trade Centre report indicates that the greatest opportunity for expanding intra-African trade lies in industrial products such as fertilizers, minerals, beauty products, and chemicals. Hailemariam urged African nations to prioritize these sectors to break free from traditional trade patterns.
Infrastructure Deficiencies Hindering Trade Efficiency
Hailemariam pointed to Africa’s inadequate trade infrastructure as a major impediment to seamless commerce. “How can we talk about free trade when goods take weeks or months to move across the continent?” he asked, noting that transportation costs within Africa account for about 29% of traded goods’ prices, compared to just 7% for those traded outside the continent.
The inefficiency of African ports is another challenge. According to the World Bank’s Container Port Performance Index, sub-Saharan African ports rank among the lowest globally in efficiency. Furthermore, the African Development Bank estimates that Africa’s trade infrastructure gap stands between $130 billion and $170 billion annually, slowing the development of key trade corridors.
To address this, Hailemariam called for significant investment in transportation networks, logistics, and digital trade infrastructure to enhance trade efficiency and reduce costs.
Bureaucratic Red Tape and Regulatory Bottlenecks
Complex trade regulations and bureaucratic delays also continue to frustrate businesses. Hailemariam cited a case from Kenya, where a tea exporter under the Guided Trade Initiative (GTI) had to navigate 48 procedural steps, 21 institutions, and 38 documents, waiting five months to get quality approval for export to Ghana.
“The administration of trade rules should facilitate, not hinder commerce,” he noted. “When African nations negotiate individually, we lose leverage. This is why AfCFTA must be fully implemented to create a united front.”
Financial Barriers to Cross-Border Trade
Another critical issue Hailemariam raised was the challenge of currency convertibility in Africa’s financial systems. “A Kenyan business wanting to buy Ghanaian goods often needs to convert funds into US dollars before exchanging them into Ghanaian cedis. This adds unnecessary costs and delays,” he explained.
He stressed the need for a more integrated African financial system to streamline cross-border payments and trade financing, ensuring that businesses can transact more efficiently without reliance on external currencies.
A Call to Action for African Leaders
Hailemariam concluded by urging African governments, businesses, and policymakers to take deliberate steps beyond trade agreements. “Our leaders, businesses, and people want to trade. The energy and ideas are there. But until we dismantle the structural barriers—poor infrastructure, regulatory inefficiencies, and financial constraints—we will not unlock the full potential of the AfCFTA.”
AfCFTA’s Strategic Priorities
Secretary-General of the AfCFTA Secretariat, Wamkele Mene, outlined key priorities to ensure the full implementation of AfCFTA and maximize its benefits:
- Validation of the AfCFTA E-CO Business Process Architecture to digitize trade facilitation.
- Completion of energy and water supply projects at Akanu-Noepe to enhance border efficiency.
- Strengthening trade and transport corridors by developing policies to monitor key corridors, improving the movement of goods, services, and people, and implementing One Stop Border Posts (OSBPs), ports, transport networks, and logistics infrastructure.
- Expanding Joint Border Management Committees to enhance customs coordination.
- Deepening private sector engagement to drive investment and business participation in AfCFTA.
- Supporting the development, harmonization, and mutual recognition of standards across Africa, including engagement with national standards bureaus and trade regulators.
- Advocating for a conducive business environment that promotes intra-African trade, particularly benefiting women, youth, and MSMEs.
- Advancing AfCFTA’s digital trade infrastructure to support seamless and efficient trade integration.
These priorities, Mene stressed, will ensure that the AfCFTA delivers tangible benefits, strengthening Africa’s trade ecosystem, economic resilience, and regional integration.
