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AFCFTA - Concrete Opportunities for U.S. Companies

The African Continental Free Trade Area (AfCFTA) will be world’s largest free trade area in terms of number of member countries, territory, and population.  It will connect 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion.  Intra-African trade is currently relatively low and limited to a small range of goods, in many cases, commodities.  The AfCFTA is expected to accelerate overall growth in many African economies and increase the level and breadth of economic integration among African countries.  

Even though the United States is not a party to the AfCFTA, U.S. companies should be aware of developments. There are concrete business opportunities for companies with a strategic vision for business on the African continent.  Below are some broad trends for the medium-term. Individual opportunities may be pursued at either the country, regional or continent-wide level.  

  • Transportation Infrastructure: as intra-African trade increases, the need for transportation infrastructure will continue to grow.  A large portion of intra-African trade is by truck freight.  
    • This creates opportunities for U.S. companies involved in road development or renovation, port construction and multimodal infrastructure, and the development of airport logistics hubs.    
  • Opportunities for International Logistics and Related Business Service Providers: African regional integration seeks to increase the number of new African goods and services providers conducting cross-border trade within Africa, including more SMEs, farmers, and women-owned businesses.
    • This growth of new entrants creates opportunities for U.S. transport, logistics, and shipping companies as well as business service providers involved in express shipments, supply chain management, and logistics management, among other areas. 
  • eCommerce, Marketing and FinTech: as tariffs drop and proposed improvements to customs processes take hold, intra-African trade in goods and services is expected to become cheaper and more efficient.  
    • This increases opportunities for marketing and eCommerce companies to help to develop online platforms for sales and marketing as well as fintech solutions for accepting online payments across the African continent. Companies should also be aware of the commercial launch of the transformative Pan African Payment and Settlement System, which will facilitate trade transactions in local African currencies. 
  • Automotive Production Machinery, Services, Consultancy and Turnkey Solutions: The African Export-Import Bank is creating a $1 billion facility for African countries to build an African value chain of production for passenger vehicles.  This includes the production of hybrid and electrical vehicles.  
    • This creates opportunities for U.S. companies to provide machinery for automotive production facilities, supply chain management solutions, advanced battery technologies and inputs, and turnkey solutions for automotive production. 
  • Regional Supply Chain, Trade, and Investment Potential: The AfCFTA intends to allow for the free movement of goods and services between member countries. 
    • This may allow American businesses currently operating in African countries to develop supply chains that source goods and add value across countries more easily and cheaply. Additionally, it should allow American companies currently producing products in specific markets to expand their sales territory to neighboring countries without encountering tariffs or barriers to trade that currently exist.

U.S. Commercial Service can assist you to understand the latest developments and formulate your strategy for doing business in this evolving African context.  Contact: U.S. Commercial Service Ghana at Office.Accra@trade.gov, Tel: +233-(0)30-274-1870, https://www.trade.gov/ghana-contact-us.  
 

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