Impact of AFCFTA on Local Businesses 

The impact of AFCFTA on local businesses cannot be overstated. Launched in January 2021, the African Continental Free Trade Area (AfCFTA) aims to create a single market of over 1.3 billion people with a combined GDP of USD 3.4 trillion, removing tariffs on 97 per cent of intra-African goods. 

For small and medium enterprises (SMEs), which account for 80 per cent of employment across Africa, understanding this impact is key to unlocking new growth opportunities.

Why the Impact of AFCFTA on Local Businesses Matters

• Expanded Market Access: Tariff elimination enables local businesses to sell to 53 other member states at a lower cost, dramatically widening their customer bases.
  
• Economic Growth Projections: Full AfCFTA implementation could boost Africa’s GDP by USD 141 billion and raise intra-African trade by 45 per cent (USD 276 billion) by 2045.
  
• Poverty Reduction & Job Creation: Greater trade flows under AfCFTA could lift millions out of poverty and sustain the SMEs that employ the majority of the workforce.

Key Opportunities for SMEs

1. Reduced Input Costs: Local manufacturers importing components from fellow AfCFTA countries benefit from lower tariffs, thereby lowering their production costs.
   
2. Integration into Value Chains: SMEs can become suppliers for larger exporters in agro-processing, textiles, and technology sectors.
   
3. Greater Foreign Investment: Harmonised rules and a larger market attract regional financiers. Afreximbank and other institutions are rolling out AfCFTA-linked credit lines for SMEs.
   
4. Digital Trade Facilitation: New e-commerce protocols streamline cross-border payments and customs clearance, enabling tech-driven SMEs to scale rapidly.

Persistent Challenges

• Non-Tariff Barriers (NTBs): Divergent standards and bureaucratic red tape at borders continue to impede many local exporters.
  
• Infrastructure Gaps: Inadequate roads, unreliable power, and high logistics costs can blunt tariff savings unless addressed through coordinated investment.
  
• Capacity Constraints: Many SMEs lack certification, packaging expertise, or digital tools to meet new market requirements.
  
• Intensified Competition: Opening borders also allows multinationals and large domestic firms to enter, raising the bar for small players.

Strategies to Maximise the Impact of AFCFTA on Local Businesses

• Export Readiness Programs: Governments and trade bodies should expand training on standards compliance, quality assurance, and market research.
  
• SME Consortia & Clusters: Forming cooperatives or industry clusters helps pool resources for bulk shipping, marketing, and certification.
  
• Digital Adoption: Leverage AfCFTA’s e-commerce framework by integrating with regional payment platforms and digital marketplaces.
  
• Advocacy for NTB Removal: SMEs must engage trade associations and policymakers to push for harmonised regulations and one-stop border posts.