Why is intra-African trade just 15%? Unpacking the promise and pitfalls of the AfCFTA

Why does it remain easier to pay for and export goods from Lagos to Turkey than to a neighbouring African country? Despite shared borders, cultural ties, and common economic goals, intra-African trade accounts for only about 15% of total trade on the continent—far behind Europe’s 60% and Asia’s 50%. This paradox is precisely what the African Continental Free Trade Area (AfCFTA) seeks to change. The AfCFTA stands as a landmark initiative and one of the most ambitious efforts in Africa’s modern economic history, designed to reshape the continent’s trade landscape and accelerate its path toward sustainable development. Signed in 2018 and officially launched in January 2021, it seeks to establish a unified, liberalised market encompassing all 55 African Union member states and a population of over 1.4 billion people, with a combined GDP exceeding $3.4 trillion. Its core objectives include eliminating tariffs on 90% of goods, reducing non-tariff barriers, and facilitating the free movement of goods, services, capital, and people across borders.

By promoting deeper regional integration, AfCFTA aims to stimulate industrialisation, improve value chains, increase competitiveness, and reduce dependency on external markets. Moreover, it presents a unique opportunity to harness the continent’s vast human and natural resources, empower youth and small businesses, and strengthen Africa’s collective bargaining power in global trade. However, achieving these goals requires overcoming notable structural, political, and infrastructural challenges that currently constrain intra-African commerce. These paper considers an overview of some of the opportunities and bottlenecks surrounding AfCFTA and intra-African commerce in subsequent paragraphs.

The African Continental Free Trade Area (AfCFTA) presents an unprecedented opportunity for market expansion across the continent. By creating a single, integrated market of over 1.4 billion people with a combined GDP exceeding $3.4 trillion, AfCFTA allows African businesses—both large and small—to transcend national boundaries and access new consumer bases. For example, a textile manufacturer in Ethiopia can now more easily export garments to markets in West Africa without facing prohibitive tariffs or complex trade barriers. This broader market access is particularly vital for landlocked countries like Rwanda or Niger, where businesses often struggle with geographic limitations and high transportation costs. AfCFTA, by reducing these barriers, paves the way for increased trade volumes, more investment opportunities, and regional economies of scale.

Additionally, Industrialisation and value addition are central goals of AfCFTA and crucial for transforming African economies from raw material exporters to producers of finished goods. The reduction or elimination of tariffs encourages businesses to invest in local manufacturing and agro-processing rather than relying on imports or exporting unprocessed raw materials. For instance, instead of Ghana exporting raw cocoa beans, more companies can be incentivised to process and package chocolate within the country, thereby increasing job creation and domestic revenue. Similarly, Nigeria’s automobile assembly sector stands to benefit from access to cheaper components and a broader market under AfCFTA, encouraging firms to manufacture and distribute vehicles within the continent rather than depending heavily on imports from Asia or Europe.

Also, Africa’s youthful population (over 60% under the age of 25) represents a powerful engine for entrepreneurship, innovation, and economic growth. The AfCFTA can play a transformative role in unlocking this demographic dividend by opening up new markets for youth-led enterprises and small and medium-sized enterprises (SMEs). For instance, tech startups in Kenya’s Silicon Savannah, such as Twiga Foods and Sendy, can now scale their digital solutions across multiple African countries with fewer regulatory hurdles. E-commerce platforms are enabling artisans and SMEs to reach continental customers, while logistics innovators like Kobo360 and Lori Systems are reducing delivery times and costs across borders. Similarly, fashion designers in South Africa and content creators in Nigeria can access new audiences in East and North Africa. By fostering regional value chains and easing cross-border business constraints, AfCFTA creates an enabling environment for the next generation of African entrepreneurs to grow, compete, and lead on a continental scale.

Furthermore, one of AfCFTA’s most direct impacts will be increasing intra-African trade, which currently stands at a low 15% of total trade—far below Europe’s ~60% and Asia’s ~50%. By addressing tariff and non-tariff barriers, AfCFTA is expected to boost trade in African-made goods and services. Countries can begin to specialise in products they have a comparative advantage in, while sourcing complementary goods from within the continent. For instance, Zambia can export copper to Morocco for electronics manufacturing, while sourcing fertilisers from Morocco in return—facilitating a mutually beneficial supply chain. As trade among African countries increases, it will help reduce the volatility associated with dependency on external markets, stabilise regional prices, and foster more sustainable economic partnerships within the continent.

Another significant opportunity lies in the potential for infrastructure investment catalysed by increased trade. As trade flows rise under AfCFTA, governments and the private sector are incentivised to invest not only in physical infrastructure such as roads, railways, ports, and border posts, but also in advanced digital systems. Initiatives like the Trans-African Highway and the African Integrated High-Speed Rail Network are gaining momentum, while digital connectivity—through fibre optic networks and mobile payment systems—is becoming essential for powering modern commerce. For instance, the African Union’s Smart Africa initiative aims to accelerate ICT infrastructure development to support cross-border digital trade. Beyond connectivity, smart logistics technologies are transforming supply chains: companies like Kobo360 and Lori Systems are leveraging Internet of Things (IoT) sensors for real-time freight tracking, while automated warehousing solutions are being piloted in South Africa and Kenya to streamline inventory management. Blockchain-based platforms are being explored to digitise customs clearance processes, reduce paperwork, and increase transparency. Meanwhile, AI-driven trade forecasting tools—like those used by Ghana’s Customs Division—can analyse trade flows and predict congestion or demand surges at ports, allowing for more efficient resource allocation. These innovations not only reduce transaction costs and delivery times but also improve access to underserved regions and enhance Africa’s global competitiveness. As AfCFTA accelerates, investments in both physical and digital infrastructure will be key to unlocking the continent’s trade potential.

AfCFTA also promotes economic diversification and builds resilience by encouraging countries to move beyond traditional export dependencies. In the wake of global disruptions like COVID-19 and the Russia-Ukraine conflict, which exposed Africa’s vulnerability to global supply chain shocks, regional self-sufficiency has gained urgency. By enabling regional production networks and import substitution, AfCFTA helps African nations develop local solutions to continental needs. For instance, during the pandemic, several countries ramped up the local production of personal protective equipment (PPE) and pharmaceuticals, a trend that AfCFTA can institutionalise. In the agricultural sector, regional collaboration under AfCFTA can help address food insecurity by facilitating the movement of surplus food from one region to another, improving food availability across the continent.

Finally, the harmonisation of policies and trade regulations across member states is a critical advantage of AfCFTA. The agreement encourages the standardisation of customs procedures, tariffs, product certifications, and intellectual property rights. This reduces administrative inefficiencies and makes it easier for businesses to operate in multiple countries. For instance, a Kenyan agribusiness exporting to Uganda or Tanzania no longer has to navigate entirely different customs documentation or product labelling requirements. The African Union’s Continental Customs Union initiative and the Pan-African Payment and Settlement System (PAPSS) are complementary measures that support regulatory integration and faster cross-border payments. Such alignment enhances business predictability, reduces costs, and improves investor confidence across Africa’s diverse but increasingly unified economic landscape.

While the African Continental Free Trade Area (AfCFTA) presents a bold vision for economic integration, several structural and operational challenges threaten its full implementation and effectiveness. One of the most pressing is the infrastructure deficit that plagues much of the continent. Many African countries suffer from underdeveloped roads, inefficient ports, outdated railways, and unreliable digital networks. For example, transporting goods from Lagos, Nigeria to Accra, Ghana—just 460 km apart—can take several days due to poor road conditions and congestion at border posts. The high cost of logistics, often accounting for up to 40% of the value of goods in Africa (compared to less than 10% in developed economies), discourages small businesses from engaging in cross-border trade and erodes competitiveness.

Beyond physical infrastructure, non-tariff barriers (NTBs) remain a major bottleneck to intra-African trade. While AfCFTA promises tariff reductions, these gains are often eroded by bureaucratic customs procedures, inconsistent product standards, licensing delays, and widespread corruption at checkpoints. For example, traders moving goods across the East African Community (EAC) frequently report delays at border crossings due to excessive paperwork and manual inspections, which can extend processing times to two days or more. Women traders, in particular, are disproportionately affected, facing harassment and bribery demands, as highlighted in multiple African Union reports. However, digital solutions are beginning to offer practical remedies. Digital customs platforms like e-Single Window systems—adopted in countries such as Ghana and Rwanda—enable traders to submit all import/export documentation through a unified online portal, dramatically cutting clearance times. Mobile apps that provide up-to-date tariff schedules and allow traders to report corruption in real time can enhance transparency and accountability at borders. Additionally, biometric systems and QR-based trade identification cards are being piloted to streamline identity verification and reduce arbitrary checks, particularly for informal and small-scale cross-border traders. These technology-driven interventions, if scaled continent-wide, could notably lower the cost and complexity of cross-border trade, bringing AfCFTA’s vision of a truly integrated African market closer to reality.

Another challenge is the lack of consistent political will and the uneven pace of implementation across member states. While 54 countries have signed the AfCFTA agreement and 47 have ratified it, actual implementation varies widely. Some governments delay domestic legislative adjustments or adopt protectionist measures to shield local industries, which contradicts the core tenets of regional integration. For instance, countries like Algeria and Ethiopia have been slower to open their markets, while others like Rwanda and Ghana have shown greater enthusiasm. This fragmented commitment creates a disjointed market and weakens the collective bargaining power that AfCFTA is meant to encourage. Political instability or leadership changes can also derail momentum, making it essential to secure long-term political buy-in across administrations.

Besides, the weak industrial base in many African countries further limits their capacity to benefit from AfCFTA. Despite its resource richness, Africa still largely exports unprocessed raw materials—such as cocoa from Côte d’Ivoire, crude oil from Nigeria, or copper from Zambia—while importing finished goods. This trade imbalance undermines the development of regional value chains. Thanks to Dangote Refineries, the narratives are changing. Without substantial investment in manufacturing and processing capabilities, many countries may find themselves unable to meet regional demand or compete effectively in the continental market. For example, African nations currently rely on Asia and Europe for machinery and processed food imports, revealing a lack of diversification that hinders sustainable economic growth.

Access to trade financing is another critical challenge, particularly for small and medium-sized enterprises (SMEs) and informal traders who constitute the backbone of African commerce. Many African financial institutions view cross-border trade as high-risk, leading to limited credit options, high interest rates, and strict collateral requirements. A small agribusiness in Malawi, for example, may struggle to secure a loan to expand its export operations to Mozambique, even though the market potential exists. Regional banks and pan-African initiatives like the African Export-Import Bank (Afreximbank) have introduced trade finance solutions, but coverage remains limited. Scaling access to affordable financing is essential to ensuring inclusive participation in AfCFTA.

The complexity of Africa’s multiple and overlapping Regional Economic Communities (RECs) also creates confusion and regulatory inconsistencies. With eight officially recognised RECs (such as ECOWAS, EAC, SADC, and COMESA) many countries are members of two or more blocs. This overlapping membership leads to conflicting rules of origin, divergent customs procedures, and competing trade protocols. For example, Kenya is part of both EAC and COMESA, which at times leads to disputes over tariff application and market access terms. Harmonising AfCFTA protocols with existing REC frameworks is necessary to reduce duplication and align regional priorities under one coherent trade agenda.

Furthermore, digital divide presents a major obstacle to inclusive participation in AfCFTA, particularly as digital trade becomes increasingly central to modern commerce. While urban centres in countries like Kenya, Nigeria, and South Africa have made impressive strides in adopting e-commerce platforms and mobile payment systems, vast rural and underdeveloped regions remain digitally excluded. Without access to reliable internet, digital literacy, or trade-enabling technologies, many small traders and informal businesses are effectively locked out of continental markets. For instance, a rural clothing producer in Burkina Faso may struggle to reach customers in Senegal due to poor connectivity and lack of digital onboarding tools.

Bridging this divide will require multifaceted interventions. Frontier technologies like satellite internet services (e.g., Starlink) offer promising solutions for expanding broadband coverage to remote areas previously underserved by traditional infrastructure. Meanwhile, online learning platforms such as Andela, ALX, and RISE are helping to build digital skills and entrepreneurial capacity across the continent—equipping young Africans to participate in tech-enabled trade, logistics, and services. On the financial side, emerging digital trade finance platforms are reducing barriers to credit for SMEs by leveraging transaction data and AI-driven risk assessment, enabling more traders to secure funding without conventional collateral. Expanding these tools—alongside mobile money and e-commerce marketplaces—will be essential to ensure that AfCFTA does not reinforce existing inequalities, but rather democratises opportunity across all regions of the continent.

Finally, security issues and political instability pose significant risks to regional supply chains and investment confidence. Armed conflicts, insurgencies, and coups in regions such as the Sahel, the Horn of Africa, and parts of Central Africa disrupt logistics routes, destroy infrastructure, and discourage investors. For example, the ongoing instability in Sudan and insecurity in Mali and Burkina Faso make it extremely difficult for businesses to operate or transport goods safely across borders. In such environments, AfCFTA’s goals of seamless trade and integration become nearly impossible. Ensuring peace, rule of law, and strong institutions is therefore foundational to any sustainable progress under the agreement.

In conclusion, the African Continental Free Trade Area (AfCFTA) represents a transformative milestone in Africa’s pursuit of economic self-sufficiency and continental integration. By creating a unified market of over 1.4 billion people with a combined GDP exceeding $3.4 trillion, AfCFTA holds the potential to shift Africa’s economic engine from raw material exports to value-added production, stimulate industrialisation, and significantly expand intra-African trade. Yet, the realisation of this vision will depend on Africa’s ability to overcome deep-rooted structural barriers through bold policy reform, cross-border collaboration, and sustained investments in both hard and soft infrastructure. Strategic priorities must include modernising transport and logistics networks, dismantling non-tariff barriers, expanding trade finance access, equipping SMEs and youth entrepreneurs with tools to scale, and harmonising trade policies to foster predictability and ease of doing business. Crucially, digital transformation is no longer optional—it is the backbone of a successful AfCFTA. From e-customs and blockchain-based supply chain management to online skills platforms, smart logistics, and AI-powered trade forecasting, technology will define how inclusive, efficient, and scalable Africa’s single market becomes. While political fragmentation, limited financing, and security concerns remain formidable challenges, AfCFTA presents a once-in-a-generation opportunity to redefine Africa’s economic narrative on African terms. For this potential to materialise, AfCFTA must evolve beyond policy frameworks into a lived reality of connected markets, empowered entrepreneurs, and digitally enabled trade. With strategic investments, bold leadership, and unity of purpose, Africa’s continental market can move from aspiration to transformation—and from fragmentation to shared prosperity.

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