From Market Access to Market Power: What African Firms Need to Capture AfCFTA’s Trade Gains

AfCFTA lifted African firms’ international-sales intensity by about 2.7 percentage points by 2022, but gains were strongest among businesses with established export networks and capacity to expand. Governments and development partners must now tackle financing, infrastructure, regulatory and export-capability gaps to turn wider market access into inclusive trade, investment and regional growth.

Africa's ambitious free-trade project is beginning to show measurable results, but new research suggests that opening markets alone will not guarantee that businesses across the continent benefit equally. Firms with international experience, established buyer networks and the financial capacity to expand production are gaining faster, creating a policy challenge for governments seeking to turn the African Continental Free Trade Area (AfCFTA) into a driver of broad-based growth.

Research by economists affiliated with the University of York, Queen Mary University of London, International Monetary Fund (IMF), and Miami University finds that the ratio of international sales to total sales among African firms increased by around 1 percentage point following the 2018 signing of AfCFTA, rising cumulatively to approximately 2.7 percentage points by 2022. The study analyses 18,094 firm-year observations covering 1,244 firms across 27 African economies.

A $3.4 Trillion Market Is Opening, but Not Equally for Every Firm

AfCFTA seeks to integrate a market of roughly 1.3 billion people with combined GDP of about $3.4 trillion. Its goods framework targets the elimination of tariffs on 97 percent of intra-African tariff lines, alongside efforts to reduce non-tariff barriers and improve trade conditions.

The study finds little evidence that international sales increased significantly when AfCFTA negotiations were underway. The stronger shift appeared after the agreement was signed in 2018, suggesting that credible policy commitments can influence business decisions even before every trade reform is fully implemented.

For governments, this makes policy certainty important. Predictable customs rules, transparent regulations, functioning rules of origin and consistent implementation can give businesses the confidence to invest in new markets.

However, the gains are uneven. Firms with previous international trading experience increased their foreign-sales share by around 3.4 percentage points more than businesses without previous export exposure.

Export Experience Is Giving Some Companies a Powerful Head Start

The type of previous export experience also matters. Companies whose exports had been confined to African markets recorded an increase of roughly 1.2 percentage points in their international-sales ratio after 2018. Firms previously exposed to overseas markets such as Europe experienced a larger increase of around 2.8 percentage points.

The researchers argue that international trading builds valuable capabilities, including relationships with buyers, knowledge of foreign regulations, market reputation and experience handling complex logistics. These advantages can be reused when new African markets become easier to enter.

This presents governments and development partners with an important challenge. If AfCFTA is to benefit smaller and less experienced businesses, market access must be accompanied by programmes that improve export readiness.

Support could include affordable trade finance, export guarantees, certification facilities, digital customs systems, market information and assistance meeting international product standards. Development institutions could also help governments simplify border procedures and remove non-tariff barriers.

Without such measures, established exporters may continue capturing a disproportionate share of AfCFTA opportunities while smaller firms struggle to participate.

Factories Need Capital Before New Markets Can Become New Sales

The research identifies production capacity as another major constraint. Firms operating in industries with high capital-adjustment costs recorded significantly smaller increases in international sales after 2018. Labour-adjustment constraints also weakened the response.

This matters because reducing tariffs does not automatically allow a manufacturer to double production. Companies may still need financing to purchase machinery, expand factories, hire workers, increase inventories or reorganise supply chains.

For policymakers, AfCFTA therefore connects trade policy with industrial and financial policy. Governments need to improve access to productive finance while strengthening transport, electricity, logistics and digital infrastructure.

International financial institutions and development banks could support this transition through credit lines, guarantees and investment in export-oriented infrastructure and productive capacity.

Private investors also have opportunities. Greater regional trade could increase demand for warehousing, logistics, transport, trade finance, digital payments, supply-chain technology and manufacturing capacity. Risks remain, however, particularly where regulations, customs procedures and infrastructure differ significantly between countries.

The Next AfCFTA Opportunity Could Come From Services

AfCFTA's impact extends beyond manufacturers. Goods producers depend on transportation, logistics, finance, communications and professional services. As goods trade expands, demand for these services can increase, creating what the researchers describe as a "servicification multiplier."

Transportation and logistics companies with previous European exposure showed particularly strong responses, while internationally experienced financial-service firms also recorded gains. Healthcare services benefited less, indicating that licensing and regulatory barriers can continue restricting cross-border activity.

This makes deeper services integration an important next step. Progress in business services, communications, financial services, transport and tourism could strengthen regional supply chains while reducing costs for exporters.

The study ultimately shows that AfCFTA can increase trade, but its development impact will depend on what happens beyond tariff reductions. Governments need predictable implementation, better infrastructure and easier access to finance. Development partners can help close gaps in logistics, standards, technology and export capabilities, while businesses need to build networks and invest in production.

The 2.7-percentage-point increase in international-sales intensity by 2022 is an encouraging early signal. The bigger test is whether Africa can convert expanding market access into stronger regional value chains, productive investment and opportunities for firms that currently lack the capital and international networks needed to compete.