AfCFTA Preachers and the Gospel of Free Trade

In Africa, the African Continental Free Trade Area (AfCFTA) has taken an almost a religious turn. Leaders, policymakers, economists, and business associations hail it as the ultimate key to unlocking intra-African trade, spurring industrialization, and attracting massive investment. With 55 countries and a market of 1.4 billion people, the AfCFTA's potential is indeed immense. The enthusiasm is palpable: I have seen people more excited about the AfCFTA than at the sight of a beautiful woman, and even met individuals including the title "AfCFTA evangelist", "AfCFTA enthusiast" or "AfCFTA advocate" on their resumés and business cards (I wonder why no one has ever thought to "AfCFTA-fanatic" or "AfCFTA-possessed"). One can easily picture them preaching at dusty border posts: "Reduce tariffs! Harmonize rules! Dismantle non-tariff barriers!"

However, for all this passionate rhetoric, the AfCFTA remains, at its core, a piece of paper. No amount of evangelism can magically fix the deep-seated structural barriers that have long constrained Africa's trade and development. This current wave of fervor mirrors a recurring historical pattern across the continent: the belief that transformation is guaranteed once an agreement is signed. Africa's history is replete with ambitious plans: from the Lagos Plan of Action to the Abuja Treaty and various regional Treaties, Agreements and Protocols. All of them generated enormous excitement but achieved limited results because implementation lagged far behind aspiration. Signing ceremonies create momentum, but they are no substitute for the structural changes required to make integration real.

The Structural Barriers: Why the Framework Isn't Enough

Beneath the fanfare, several stubborn realities prevent the free flow of goods and services:

• Infrastructure Deficit: Africa's infrastructure financing gap (including transport, energy and digital) is estimated at $130-170 billion annually. Transport and logistics inefficiencies are so severe they can increase the cost of goods by 30-40%, making theoretical "free trade" benefits meaningless in practice.
• Energy Reliability: Inconsistent electricity supply raises production costs and deters manufacturers. Without reliable energy, tariff reductions cannot translate into globally competitive industries.
• High Transaction Costs: Cross-border traders continue to be frustrated by customs delays, cumbersome documentation at borders, poor digital connectivity, and weak logistics networks.
• Skills Gap: Many African countries lack the technical, managerial, and vocational expertise required for industrial development. Educations systems are misaligned with labor market skill. This shortage limits the ability of domestic industries to expand, innovate, and compete effectively in the AfCFTA market.
• Regulatory Risk: Divergent or frequently changing regulations across countries create uncertainty for businesses, complicate compliance, and can nullify the benefits of trade agreements.
• Governance Risks: Corruption, political instability, and security concerns actively discourage long-term investment.
• FDI Illusions: Although Africa attracted a record $97 billion of FDI in 2024, a closer reading of the UNCTAD World Investment Report reveals that these inflows are highly concentrated in just a few countries and a limited number of projects. This concentration highlights that market size alone is not enough to generate sustained and diversified investment across the continent.

The Forgotten Gospel: Access to Finance

Africa's financial sector is the elephant in the room. Without significant reform in this sector, the AfCFTA cannot empower the majority of its potential beneficiaries. Despite the spreading of mobile money and digital payment, Africa remains the most cash-dependent economy in the world. In sub-Saharan Africa, less than half (49%) of adults holds a bank account and has access to formal financial services, compared to over 90% in high-income economies. Small and medium enterprises (SMEs), which account for up to 90 percent of all businesses in sub-Saharan Africa and represent 38 percent of the region's GDP, face a crippling credit gap exceeding $330 billion annually.

High interest rates, shallow capital markets, and limited banking penetration all constrain the ability of African entrepreneurs to seize AfCFTA opportunities. Even the most zealous preacher cannot conjure loans out of thin air. Without reforming the banking and financial sector (by improving credit access, strengthening regional capital markets, and expanding digital financial services), the AfCFTA risks remaining a framework that benefits only a narrow segment of large (predominantly foreign) firms, while excluding the majority of African traders and SMEs.

Lessons from Other Trade Blocs

The challenges Africa faces are not unique. The experiences of other regional blocs offer a clear warning:

ASEAN (Southeast Asia): When the ASEAN Free Trade Area was established in the 1990s, member states initially struggled with the same issues: weak infrastructure, limited capital markets, and uneven development. It took decades of sustained investment in ports, energy, financial sector reforms, and integrating production networks to transform ASEAN into today's competitive manufacturing hub. Africa must heed the foundational warning issued by Narciso R. Ramos, the Foreign Minister of the Philippines, at ASEAN’s founding on August 8, 1967: “The fragmented economies of Southeast Asia [with] each country pursuing its own limited objectives and dissipating its meager resources in the overlapping or even conflicting endeavors of sister states carry the seeds of weakness in their incapacity for growth and their self-perpetuating dependence on the advanced, industrial nations”.

Applied to Africa, this insight underscores a key challenge for the AfCFTA: signing a continental free trade agreement alone is not enough. Without strong, coordinated efforts and genuine cooperation among member states, the agreement risks remaining symbolic, unable to generate the growth, investment, and industrial transformation it promises. True benefits will only materialize if African nations translate the AfCFTA’s principles into shared strategies, aligned policies, and collaborative implementation on the ground.

Mercosur (South America): Founded in 1991, Mercosur has consistently struggled to deliver on its early promises. Persistent infrastructure bottlenecks, divergent macroeconomic policies, and weak credit systems have limited its effectiveness. Even today, intra-Mercosur trade remains below potential, illustrating that FTAs cannot substitute for fundamental structural reforms.

The lesson is undeniable: integration frameworks require long-term, complementary reforms in infrastructure, financial systems, and governance. Trade agreements alone cannot resolve these underlying constraints.

Conclusion: From Paper to Practice

The enthusiasm for the AfCFTA is understandable, but it must be tempered with realism. The agreement provides an essential framework, but its success hinges on whether it is paired with deep structural change. To move from the "paper gospel" to tangible progress, African governments must:

• Massively invest in transport, energy, cross-border infrastructure and digital connectivity.
• Modernize customs and decisively reduce non-tariff barriers.
• Strengthen the rule of law, tackle corruption, and ensure security.
• Create conducive business environments that support investment, entrepreneurship, and industrial development.
• Urgently reform the banking sector to expand access to affordable finance, enabling SMEs, women-led businesses, and informal traders to fully participate.

Africa's destiny will not be reshaped by signing or ratifying a piece of paper; it will be built by sustained investment, financial reform, and the creation of an enabling environment where entrepreneurs can truly thrive. Until then, the AfCFTA preachers can wave their banners and hand out their cards. Just don’t expect the borders to dissolve, the factories to hum, or trillions to magically appear.

Passion alone will not build this continent.