Africa's Continental Free Trade Area and the Inclusion of Small Traders

Accra, Ghana: For Mabel Simpson, a fashion entrepreneur who makes laptop bags, handbags and cushions from African prints, the geography of her export business is set by arithmetic rather than ambition. Shipping a one-kilogramme item to the United States costs her about $25. Sending the same item to Uganda costs about $60.

"So, which is cheaper? The USA," she told the BBC's Nairobi correspondents.

Her largest markets are the United States and the United Kingdom, not because African customers lack appetite for her work, but because import taxes and freight charges make her goods too expensive to sell elsewhere on the continent. She believes an African free trade area would change that. "This means we are going to be able to produce in numbers and more people are going to be able to afford our products and we are going to be able to be more competitive in Africa," she said.

Her calculation sits at the heart of the African Continental Free Trade Area, the flagship project of the African Union's Agenda 2063 development framework. The union approved the plan at a summit in Addis Ababa in January 2012, signed the agreement in Kigali on 21 March 2018, and brought it into force on 30 May 2019. Trading under the new regime began on 1 January 2021 after operational instruments were launched in Niamey in July 2019.

The prize is substantial. An analysis in Arab News puts the prospective market at about 1.4 billion people and $3.4 trillion in combined gross domestic product, and says 50 African countries have now ratified the agreement, leaving only Eritrea outside it. The African Union's own account states that 90 percent of tariff lines are to be liberalised over a ten-year period with a five-year transition, plus a further 7 percent for "sensitive products". A trade observatory portal and an online negotiation tool are meant to bring transparency to tariff offers, while a continental mechanism monitors non-tariff barriers for eventual elimination.

The economic expectations are correspondingly large. According to the Arab News analysis, International Monetary Fund and World Bank estimates project that full implementation could increase intra-African trade by more than 52 percent, raise continental income by about $450 billion and lift 30 million people out of extreme poverty by 2035. Cutting non-tariff barriers and improving trade facilitation would push the gains further, with real GDP rises potentially reaching 7 to 10 percent.

Yet Hafed Al-Ghwell, a senior fellow at the Stimson Center in Washington, argues in Arab News that the agreement's biggest test is not how efficiently multinational companies move goods under preferential tariffs. "Informal activity accounts for more than 80% of employment in parts of Africa," he writes, while informal cross-border trade is estimated at roughly $176 billion annually. That is equal to about 7 to 16 percent of formal intra-African trade flows, and as much as 30 to 72 percent of formal trade between neighbouring countries.

The same analysis says informal activity contributes more than half of GDP in countries including Cameroon, Zimbabwe, Nigeria and Tanzania, and that informal cross-border trade reaches an estimated $17.6 billion in southern Africa alone, equivalent to roughly 30 to 40 percent of intra-regional trade. Women account for about 70 percent of informal cross-border traders continent-wide, rising to around 80 percent in the Great Lakes region.

Individual corridors reveal how much commerce moves beneath official statistics. Al-Ghwell cites estimated annual agricultural trade between Morocco and Mauritania of $2.5 billion, Tunisia-Libya movements of fuel and foodstuffs of $1 to $2 billion, Kinshasa-Brazzaville trade of about $2.5 billion, and Nigeria-Cameroon-Niger-Chad border trade of roughly $3.5 billion.

The formal machinery is being built to meet part of this demand. The Pan-African Payment and Settlement System, developed with the African Export-Import Bank, is designed to allow cross-border payments in African currencies and reduce dependence on the dollar or the euro. The African Union describes it as a way to "formalise some of the unrecorded trade due to prevalence of informal cross-border trade in Africa". Al-Ghwell notes, however, that the system still favours users already connected to banks, while currency conversion costs alone drain roughly $5 billion a year from African trade.

The gap between design and street-level reality shows in the time it takes for tariff cuts to reach shop shelves. David Luke, a trade policy expert at the United Nations Economic Commission for Africa, told the BBC that in most cases duty "will be refunded later since the process, including gazetting, is in progress". Andrew Mold, the commission's head of regional integration and AfCFTA cluster, expects modest price reductions for food and building materials, and more pressure on services. "With greater competition, we should see prices come down for services like telecoms, business services and finance," he said.

The BBC's reporting from 2021 illustrates why the union is so keen. Kenya is a major flower exporter, yet Nigeria imports flowers from the Netherlands, and palm oil in Kenya is likely to come from Malaysia rather than Nigeria. Unctad, the UN trade agency, put intra-African trade at just 2 percent of the continent's total in 2015-17, against 67 percent in Europe and 61 percent in Asia. The World Bank, cited by Business Insider Africa, uses a broader measure of roughly 15 to 20 percent of Africa's total trade conducted within the continent.

Politics is the other fault line. Business Insider Africa reported that Nigeria's parliament suspended official visits by lawmakers to South Africa and participation in South African-hosted legislative activities, following renewed tensions over attacks on Nigerians and other African migrants. The restriction does not apply to government visits, and earlier proposals to review bilateral trade and aviation agreements have not become government policy.

The commercial stakes are real. Nigerian officials say 98 citizens died in mob and hate-related incidents in South Africa between 2022 and 2026, and 1,695 Nigerians returned voluntarily from South Africa in 2026. South African Airways, which ran as many as seven weekly flights between Johannesburg and Lagos before the pandemic, is now flying three a week amid weaker demand, partly linked by industry sources to safety concerns.

Business is nonetheless trying to keep the corridor open. On 2 September, representatives of the South African Tourism Board, South African Airways, the Nigeria-South Africa Chamber of Commerce and Nigerian travel and tourism organisations met in Lagos to discuss rebuilding confidence in travel. Iyke Ejimofor, executive secretary of the chamber, captured the stakes: "Tourism and trade go hand in hand. When Nigerians travel to South Africa, they also do business. We must protect that corridor," BusinessDay quoted him as saying.

Governments, too, are trying to contain the dispute. South African President Cyril Ramaphosa sent Foreign Minister Ronald Lamola to Abuja in July as his special envoy for talks on migration, law enforcement and the treatment of Nigerian nationals. Both sides agreed on the need to reduce inflammatory rhetoric, and the South African government condemned xenophobia, racism and vigilante attacks against foreign nationals. South Africa is simultaneously absorbing severe domestic pressure, with official unemployment rising from 32.7 percent in the first quarter of 2026 to 33.6 percent in the second, leaving 8.5 million people out of work.

There is evidence the trade area is beginning to generate real commerce. South Africa says trade conducted under AfCFTA preferential terms between January 2024 and February 2026 reached R2.6 billion, covering mining equipment, electrical machinery, food, clothing, plastics and appliances, according to Business Insider Africa.

Wamkele Mene, secretary-general of the AfCFTA secretariat, framed the strategic case at the launch. "Covid-19 has demonstrated that Africa is overly reliant on the export of primary commodities, overly reliant on global supply chains," he said. "When the global supply chains are disrupted, we know that Africa suffers."

What happens next, analysts suggest, is less about grand institutional innovation than about adapting proven tools to ordinary commerce. Al-Ghwell points to the Common Market for Eastern and Southern Africa's Simplified Trade Regime, introduced in 2010, as a working model built on the proposition that small-scale cross-border commerce needs a different administrative pathway from large commercial shipments. A trader facing one predictable form, a transparent fee and a functioning information desk has a tangible reason to declare goods. The objective, he argues, is to make formalisation cheaper and more predictable than evasion, and to make systems such as the Pan-African Payment and Settlement System interoperable at street level.

The BBC reported that the deal commits countries to remove tariffs on 90 percent of products within five years, with the full journey potentially lasting until 2035. Mold describes implementation as "a process rather than an event". The question left open by the sources is whether governments will redesign the border around the trader who actually uses it.