The AfCFTA seeks to create a single market for goods and services, facilitate the movement of capital and investment, promote industrialisation and regional value chains, and strengthen Africa's position in global trade. It brings together 55 African countries and a market of about 1.3 billion people, with a combined GDP estimated at roughly $3.4 trillion.
African countries must therefore build the financial, physical and industrial infrastructure required to make integration commercially meaningful. This is where two of the continent's most important financial institutions - the African Export-Import Bank (Afreximbank) and the African Development Bank (AfDB) - have a strategic role to play.
Their mandates are complementary. Afreximbank is particularly positioned to finance and facilitate African trade, while AfDB has a broader development mandate that includes infrastructure, industrialisation, regional integration and private-sector development. The opportunity is to make these institutions work even more closely together as the financial backbone of AfCFTA.
The first challenge is simple: businesses cannot trade what they cannot finance. African companies, particularly small and medium-sized enterprises, frequently face high borrowing costs, limited access to trade finance, currency risks and inadequate knowledge of markets beyond their immediate borders. These constraints discourage businesses from taking advantage of continental opportunities.
Originally published by African Business.