Africa is emerging as a dynamic marketplace with immense potential for growth, driven by the African Continental Free Trade Area (AfCFTA) launched in January 2021. This ambitious initiative, uniting nearly all 55 AU member states, seeks to create a cohesive market for goods and services across the continent, representing the world’s largest free-trade area. For German SMEs in Africa exploring new markets, this development could provide transformative opportunities for business expansion across the continent.
AfCFTA is expected to drive substantial growth in trade across the continent. By 2035, projections indicate that Africa’s total exports could reach $952 billion, with full implementation boosting trade by 29% and enabling an annual growth rate of 3% (According to the latest Standard Chartered trade report, The Future of Trade. ). South Africa, with its advanced market structures and infrastructure, is well-positioned to expand its trade footprint within Africa, promoting tariff liberalisation that enhances regional and international reach. For German companies, aligning with South African firms offers a strategic entry point to capitalise on trade flows, market insights, and regional connectivity.
As AfCFTA gains momentum, financial institutions and banks are prepared to play an essential role in the trade landscape. They are set to expand financial access for SMEs, drive investment, and support digital banking technologies, essential for overcoming capital constraints—one of the primary trade barriers cited by African business leaders. German SMEs in Africa can benefit from partnerships that leverage such finance solutions to minimise risks, tap into working capital, and explore foreign direct investment opportunities that AfCFTA is making more accessible. Moreover, as cross-border trade grows, robust payment systems for intra-African transactions are emerging, facilitating seamless operations for businesses engaged in inter-regional trade.
South Africa’s economy continues to be a major force in African trade, accounting for about 25% of Africa’s total exports in 2023. Data from the SA Revenue Service reveals that intra-African trade was South Africa's second-largest export partner, reinforcing the importance of regional trade for the economy. As the AfCFTA drives trade corridors across Africa, South Africa’s strengths in manufacturing, agro-processing, automotive industries, and renewable energy are expected to play a leading role in developing value-added industries across the continent. This growth fosters interdependence, creating new business opportunities and driving economic integration.
German SMEs in Africa looking to invest can find significant opportunities by collaborating with South African businesses in high-growth sectors. As “Made in Africa” products gain regional and global visibility, there is increased demand for localised goods and services across the continent, opening up new pathways for German companies seeking to establish a long-term presence in Africa.
The AfCFTA represents a unique opportunity to redefine Africa’s role in global trade. By fostering a competitive local market, the agreement can curb capital outflows, encourage reinvestment within the continent, and create vibrant, interconnected economies. For German SMEs considering African expansion, partnering with South African firms can provide essential market access, local expertise, and strategic alignment within Africa’s evolving trade ecosystem.
We encourage German SMEs to reach out to InterGest South Africa to explore how our tailored consulting services can support your business objectives in Africa. Our expertise, combined with the BAFA consulting vouchers program, can help reduce the financial barriers to entry, making it easier for your company to navigate and thrive in the African market. Contact us today to discover the opportunities that await you!
Source: Business Day: https://www.businesslive.co.za/bd/opinion/2024-10-30-chris-egberink-sa-trade-potential-evolves-in-afcfta-era/
