AfCFTA Explained: Can Africa's $3.4 Trillion Free Trade Zone Actually Work?

AfCFTA Explained: Can Africa's $3.4 Trillion Free Trade Zone Actually Work?

Here's a statistic that should embarrass everyone: Africa trades more with Europe than with itself.

In 2022, intra-African trade accounted for just 14.4% of Africa's total trade. Compare that to Europe (68%), Asia (59%), or even South America (20%).

A container of goods can travel from Kenya to Belgium faster and cheaper than from Kenya to Nigeria.

That's not geography. That's colonial design.

The AfCFTA—the African Continental Free Trade Area—is the most ambitious attempt to fix this. If it works, it could transform the continent. If it fails, it becomes another monument to African disunity.

As of late 2025, the jury is still out.

What Is AfCFTA?

The African Continental Free Trade Area is a free trade agreement covering most of Africa.

The Numbers:

AfCFTA is the world's largest free trade area by number of member states since the World Trade Organization was created.

What AfCFTA Is Supposed to Do

The agreement aims to:

1. Eliminate tariffs on 90% of goods traded between African countries

2. Reduce non-tariff barriers (the regulations, paperwork, and hidden obstacles that block trade)

3. Create a single market for goods and services

4. Enable free movement of people and capital

5. Eventually create an African customs union

The Promise:

According to the World Bank, if fully implemented, AfCFTA could:

• Increase Africa's income by 7% ($450 billion) by 2035

• Lift 30 million people out of extreme poverty

• Boost intra-African trade by 52%

• Increase Africa's exports by $560 billion

That's the promise. Now for the reality.

Where AfCFTA Stands Today (Late 2025)

What's Working:

Ratification: 48 countries have ratified the agreement. Only Eritrea, Benin, Libya, Somalia, Sudan, and South Sudan haven't.

The Guided Trade Initiative (GTI): A pilot program to test AfCFTA's systems has expanded from 7 countries to 39 countries.

Countries actively trading under AfCFTA rules: As of September 2025, 11 countries are officially trading under AfCFTA preferences: Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania, Tunisia, and South Africa (with others joining).

Intra-African trade growing: Trade among African nations reached $192.2 billion in 2023—a 3.2% increase.

Nigeria joined: In July 2024, Africa's largest economy finally started trading under the GTI, exporting goods to Cameroon, Kenya, Algeria, Uganda, and Egypt.

Key infrastructure in place:

• E-Tariff Book: Online resource showing tariff and rules of origin information

• PAPSS: Pan-African Payment and Settlement System (more on this below)

• AfCFTA Adjustment Fund: Making its first investments

What's Still Missing:

Rules of origin unfinished: Negotiations continue on key sectors like textiles, clothing, and automobiles. Without agreed rules, countries can't determine which products qualify for preferential treatment.

Non-tariff barriers: Even where tariffs are reduced, goods get stuck at borders due to regulations, inspections, paperwork, and bureaucratic obstacles.

Sensitive products: 7% of products are classified as "sensitive" with longer liberalization timelines. Countries are protecting their domestic industries.

6 countries haven't ratified: Including conflict zones (Sudan, South Sudan, Libya, Somalia) and Eritrea.

Implementation gaps: Many countries have signed but haven't actually changed their customs procedures.

PAPSS: The Game-Changer Nobody Talks About

One of AfCFTA's most important achievements isn't about tariffs at all.

The Pan-African Payment and Settlement System (PAPSS), launched in January 2022, allows African businesses to pay each other in local currencies.

Why This Matters:

Before PAPSS, if a Kenyan company wanted to buy goods from Nigeria, here's what happened:

1. Convert Kenyan shillings to US dollars

2. Send dollars through a US or European correspondent bank

3. Nigerian company receives dollars

4. Convert dollars to Nigerian naira

5. Each conversion costs money. Each step takes time.

Some estimates suggest African businesses paid $5 billion annually in currency conversion costs just to trade with each other.

With PAPSS:

1. Kenyan company pays in Kenyan shillings

2. PAPSS handles the conversion

3. Nigerian company receives Nigerian naira

4. Done in seconds. Fraction of the cost.

As of 2025, commercial banks across Africa are adopting PAPSS, though full continental coverage is still years away.

Why African Countries Don't Trade With Each Other

AfCFTA is trying to solve structural problems that have existed since independence.

1. Colonial Infrastructure

Railways and roads were built to move resources from the interior to the coast—from mine to port, from plantation to ship.

They were not built to connect African cities to each other.

Result: It's often easier to ship goods from Lagos to London than from Lagos to Nairobi.

2. Similar Economies

Colonial economies were designed to export raw materials. Everyone produces the same things.

If both Ghana and Côte d'Ivoire export cocoa, they're not natural trading partners—they're competitors.

3. Trade Barriers

Even without tariffs, goods face:

• Different standards and regulations in each country

• Multiple inspections at each border

• Paperwork that takes days or weeks

• Corruption and informal "taxes"

• Currency conversion challenges

A truck crossing from Kenya to Uganda can spend days at the border. The same distance in Europe takes hours.

4. Lack of Trade Finance

African banks often won't finance trade with other African countries because they perceive it as too risky. They'll finance trade with Europe or China more readily.

5. Suspicion and Protectionism

Every country fears being flooded by imports from more industrialized neighbors. Nigeria worried that AfCFTA would mean cheap Chinese goods flowing through less protected neighbors. South Africa's manufacturers worry about competition.

The Skeptic's Case: Why AfCFTA Might Fail

Africa has tried this before.

Previous Integration Attempts:

Africa has 8 regional economic communities, many with overlapping memberships. A country can belong to three different trade blocs with different rules.

The problem isn't signing agreements. It's implementing them.

Specific Concerns:

Political will evaporates: Leaders sign agreements at summits, then go home and protect domestic industries.

Big economies dominate: Nigeria and South Africa together represent over 50% of Africa's GDP. Smaller countries fear being swamped.

Industrialization gap: You can't trade manufactured goods if you don't manufacture anything. Most African countries still export raw materials.

Infrastructure costs: The African Development Bank estimates Africa needs $130-170 billion annually in infrastructure investment. Where's that coming from?

ECOWAS fracturing: Mali, Burkina Faso, and Niger left ECOWAS in January 2025. Regional integration is going backward, not forward.

The Optimist's Case: Why AfCFTA Might Work

1. It's Different This Time

Previous agreements were regional. AfCFTA is continental. Instead of 8 overlapping blocs, there's one framework.

2. Technology Changes Everything

PAPSS for payments. Digital certificates of origin. Online tracking for shipments. Technology can solve problems that defeated previous generations.

3. Demographics Demand It

Africa's population will double by 2050. That's 2.5 billion people needing jobs. Without industrialization and trade, there's no way to employ them.

The alternative to AfCFTA isn't the status quo—it's crisis.

4. China and Europe Are Proof

In the 1950s, European countries were bombing each other. Today they share a currency. If Europe could integrate, why not Africa?

China went from poverty to manufacturing superpower in 40 years by creating internal markets at scale. Africa has the same potential.

5. The Diaspora Is Watching

Millions of Africans abroad want to invest in the continent. A unified market makes investment more attractive than 54 separate tiny markets.

What AfCFTA Needs to Succeed

1. Infrastructure Investment

The African Development Bank estimates $130-170 billion per year is needed. Current investment is about $100 billion—leaving a gap of $30-70 billion annually.

Priority: Roads and railways connecting African cities to each other, not just to ports.

2. Industrialization

You can't trade manufactured goods if you don't make them. Countries need to:

• Process raw materials locally before export

• Build manufacturing capacity

• Develop regional value chains (one country makes components, another assembles)

Example: Instead of everyone exporting raw cotton, create a textile value chain across multiple countries.

3. Trade Finance

African banks need to treat intra-African trade as seriously as trade with Europe or China.

Afreximbank and the AfCFTA Adjustment Fund are starting to address this, but scale is needed.

4. Customs Reform

Borders need to become faster, more transparent, and less corrupt. Single-window systems, digital processing, and one-stop border posts can reduce delays from days to hours.

5. Political Commitment

Leaders need to actually implement what they sign, even when domestic industries complain.

Case Study: What Nigeria's Entry Means

Nigeria is Africa's largest economy and most populous country. For years, it resisted AfCFTA, fearing:

• Cheap imports flooding local markets

• Foreign goods entering through less-protected neighbors

• Damage to domestic manufacturing

In July 2024, Nigeria finally started trading under AfCFTA rules. The first exports included bags, ceramics, textiles, cables, smart cards, soap, and starch—bound for Cameroon, Kenya, Algeria, Uganda, and Egypt.

Why It Matters:

Without Nigeria, AfCFTA would be like the EU without Germany. Nigeria's participation gives the agreement critical mass.

But Nigeria's concerns were legitimate. Small-scale manufacturers fear competition. The question is whether AfCFTA will help Nigeria industrialize—or accelerate deindustrialization by flooding markets with imports.

What Success Would Look Like

If AfCFTA works, by 2035-2040:

• A Kenyan company could sell goods in 54 countries without 54 different sets of paperwork

• African manufacturers would produce for African consumers, not just for export to Europe

• A Nigerian entrepreneur could source components from Morocco, assemble in Kenya, and sell across the continent

• African countries would trade more with each other than with former colonial powers

• "Made in Africa" would be a mark of quality, not a consolation prize

Frequently Asked Questions

What is AfCFTA?

The African Continental Free Trade Area is a free trade agreement covering 54 African countries with a combined GDP of $3.4 trillion and 1.5 billion people. It aims to eliminate tariffs on 90% of goods, reduce trade barriers, and eventually create a single African market.

When did AfCFTA start?

The agreement was signed in March 2018 in Kigali, Rwanda. It entered into force in May 2019 and trading officially began on January 1, 2021. The operational phase was announced in April 2024.

How many countries have joined AfCFTA?

54 of 55 African Union members have signed. 48-49 have ratified the agreement. Only Eritrea has neither signed nor ratified. Benin, Libya, Somalia, Sudan, and South Sudan have signed but not ratified.

What is PAPSS?

The Pan-African Payment and Settlement System allows African businesses to pay each other in local currencies instead of converting through US dollars. It launched in January 2022 and is being adopted by commercial banks across Africa.

Will AfCFTA actually work?

Too early to tell. Progress has been slower than hoped, but infrastructure is being built. Key tests will be whether major economies like Nigeria and South Africa fully commit, whether infrastructure investment materializes, and whether countries actually implement their commitments.

How does AfCFTA affect everyday Africans?

If successful, AfCFTA could mean: cheaper goods (lower tariffs), more jobs (manufacturing growth), better products (competition drives quality), and more opportunities for entrepreneurs to sell across borders.

The Bottom Line

AfCFTA is Africa's biggest bet on itself.

It's an admission that 54 tiny, fragmented economies can't compete in a world of giants. That the colonial model—everyone exporting raw materials to Europe—is a dead end. That Africans buying from Africans makes more sense than everyone buying from China.

Is it working? Slowly. Imperfectly. With setbacks.

Is it necessary? Absolutely.

The alternative is continued fragmentation in a world that rewards scale. Continued dependence on commodity exports while the rest of the world industrializes. Continued poverty despite unimaginable resources.

AfCFTA is not a silver bullet. It won't work unless paired with industrialization, infrastructure, and political will.

But it's the best framework Africa has ever created for trading with itself.

Whether it succeeds depends on whether African leaders mean what they sign—or whether this becomes another beautiful document gathering dust while the continent's wealth flows elsewhere.