High costs and inefficient border procedures hamper intra-African trade, as the African Continental Free Trade Area (AfCFTA) is currently not fully operational and needs streamlined processes to realize its potential, said a Kenya-based NGO focused on trade, TradeMark Africa (TMA).
"High costs, inefficient border procedures, complex documentation requirements, and the lack of harmonization between countries create major business obstacles," TMA noted in its "Driving African Trade through digitalization report."
Despite the potential of the AfCFTA, intra-African trade remains low compared to trade with the rest of the world and trade costs are significantly higher than in other regions. While some improvements have been made, particularly in the agricultural sector, challenges remain and have a significant impact on small businesses, according to TMA.
Afreximbank's December 2024 report on intra-African trade promotion noted that as of 2023, intra-African trade accounted for approximately 17% of Africa's total trade, up slightly from 14% in 2022, but still significantly less, compared with 68% of intra-European trade.
Full implementation of the AfCFTA would increase African regional trade by 35% by 2045 and reduce Africa's dependence on manufactured imports, Afreximbank added.