Africa’s free trade ambitions will not be achieved through agreements signed in conference rooms alone. They will be built by millions of small businesses that produce goods, create jobs and connect communities across borders. If these enterprises cannot access affordable finance, the African Continental Free Trade Area (AfCFTA) risks becoming an ambitious political project that delivers limited economic transformation.
AfCFTA provides Africa with a historic opportunity to create a single market of more than 1.4 billion people and a combined economy valued at over $3 trillion. The agreement is designed to increase intra-African trade, promote industrialization and help African companies compete globally. However, the success of this vision depends on whether Small and Medium-sized Enterprises (SMEs) can participate meaningfully.
SMEs are the foundation of Africa’s economy. According to the International Finance Corporation (IFC), small and medium enterprises represent about 90 percent of businesses and more than 50 percent of employment globally. In Africa, SMEs account for the overwhelming majority of private sector activity and provide livelihoods for millions of people. The World Bank estimates that Africa’s working-age population will grow significantly over the coming decades, making job creation through entrepreneurship and private sector expansion essential.
Yet many African SMEs remain excluded from the opportunities created by regional integration because they lack access to finance, technology, export markets and business networks.
The financing challenge is one of the biggest barriers. The African Development Bank and other financial institutions have repeatedly highlighted that African businesses face a significant financing gap, with small enterprises struggling most to access credit. The International Finance Corporation has estimated that formal micro, small and medium enterprises in developing countries face a financing gap of more than $5 trillion globally, with sub-Saharan Africa among the regions most affected.
Banks must change how they view SMEs. Too often, small businesses are considered too risky because they lack traditional collateral or long credit histories. This approach overlooks their economic contribution and prevents promising companies from expanding.
Financial institutions should develop lending models that reflect the realities of African businesses. This includes using digital financial records, supply chain data and alternative credit assessments to evaluate businesses. Banks should also expand products such as trade finance, invoice financing and credit guarantees that allow SMEs to participate in cross-border commerce.
Some African countries are already showing what is possible when businesses are connected to regional markets.
Kenya has emerged as one of the continent’s strongest examples of AfCFTA-driven trade opportunities. Kenyan companies have expanded exports in sectors including agriculture, manufacturing and services, while the country has actively participated in initiatives aimed at simplifying cross-border trade. The government has also used digital trade platforms to support small businesses seeking regional customers.
Rwanda has also positioned itself as a leader in implementing AfCFTA opportunities. The country has promoted services exports, manufacturing and investment partnerships while working to improve trade facilitation. Rwanda’s experience demonstrates how smaller economies can benefit when they invest in efficient institutions and create an environment where businesses can access regional markets.
Egypt and Morocco have leveraged their manufacturing capacity and strategic locations to strengthen their participation in African trade. Egyptian companies have increased exports of manufactured goods across the continent, while Morocco has expanded economic ties with African markets through sectors including banking, telecommunication, construction and renewable energy.
Nigeria, Africa’s largest economy, has significant potential because of its large consumer market, entrepreneurial culture and technology sector. Nigerian fintech companies and businesses in sectors such as agriculture and consumer goods are increasingly looking beyond domestic borders, although regulatory and infrastructure challenges remain.
The growth of intra-African trade shows that AfCFTA is beginning to create opportunities. According to the African Export-Import Bank’s African Trade Report 2025, intra-African trade increased in 2024, reaching approximately $220 billion, while Africa’s total merchandise trade recovered to about $1.5 trillion. These figures demonstrate progress, but they also show that the continent is still far from reaching its full trade potential.
For SMEs, the biggest question is whether they can access the tools required to take advantage of this growth.
Governments must continue removing barriers that make regional trade difficult. Customs delays, inconsistent regulations, poor infrastructure and limited access to market information continue to increase costs for small businesses. AfCFTA’s success requires practical reforms that make it easier for an entrepreneur in Nairobi, Kigali or Accra to sell products across African borders.
Banks and development institutions must also recognize that financing SMEs is not simply a development objective. It is a commercial opportunity. Africa’s entrepreneurs represent future customers, employers and business partners.
Women and young entrepreneurs require particular support. Women-owned businesses often face greater obstacles in accessing capital, while young entrepreneurs frequently struggle to secure financing despite strong ideas and market opportunities. Supporting these groups will be critical because Africa has one of the youngest populations in the world.
The recent partnership between the AfCFTA Secretariat and Ecobank Group to promote intra-African trade and support SMEs reflects growing recognition that financial institutions must become active partners in continental integration. Such initiatives need to expand across the banking sector.
Africa does not need more promises about the potential of SMEs. It needs action. Banks must provide the financing that allows small businesses to scale. Governments must remove obstacles that prevent companies from trading. Development institutions must invest in systems that help entrepreneurs compete.
The future of AfCFTA will not be determined by the size of agreements or the number of meetings held by policymakers. It will be determined by whether ordinary businesses can use the agreement to grow.
A successful African single market will be one where a small manufacturer in Kenya can sell products in Ghana, a technology company in Egypt can serve customers in Rwanda, and a farmer in Madagascar can access markets across the continent.
Mr Obonyo is a Public Policy Analyst. Email: raphojuma@hotmail.com
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