AfCFTA Advisor: Limited Funding Hinders African SMEs from Engaging in Cross-Border Trade

Cynthia E. Gnassingbé-Essonam, Senior Advisor to the Secretary-General of the African Continental Free Trade Area (AfCFTA), has drawn attention to the significant financial challenges faced by small and medium-sized enterprises (SMEs) in Africa, particularly when it comes to engaging in cross-border trade. Speaking at a webinar organized by LIMA Partners, which took place on April 25, 2025, Gnassingbé-Essonam noted that while AfCFTA offers a wealth of opportunities for business expansion across the continent, many SMEs are unable to take full advantage due to a lack of financial resources and logistical infrastructure.

She explained that one of the primary obstacles that African SMEs encounter when attempting to expand beyond their home markets is the inadequate financial muscle needed to cover the costs associated with cross-border trade. This includes not only the challenges posed by transportation and logistics but also the inability to finance the shipment of products or to manage the complexities of international trade. Many African businesses struggle to compete in this space due to these limitations, making it difficult for them to realize the full potential of the AfCFTA initiative.

In light of these challenges, Gnassingbé-Essonam revealed that the AfCFTA has been actively working on solutions to support SMEs by promoting the creation of specialized trading companies. These companies are intended to aggregate resources and provide critical services that SMEs need to participate in cross-border trade. The goal is to address the logistical and financial barriers that often restrict SMEs, thus enabling them to enter and thrive in new markets.

The services offered by these trading companies include warehousing, financial backing, and collateral management. These services are designed to reduce the burdens that SMEs face by providing them with the infrastructure and support needed to navigate the complexities of international trade. The idea is to create a more streamlined, efficient process for SMEs to market and sell their products across African borders, ensuring that they have the tools and resources to compete effectively in the global marketplace.

Since the launch of this initiative, a number of AfCFTA trading companies have already been established in key African countries such as Ghana, Rwanda, Egypt, Chad, South Africa, The Gambia, and Kenya. These trading hubs are already making a notable difference in how trade is conducted across the continent. By offering aggregated support, these companies have helped to link various markets, fostering a stronger network for SMEs to collaborate and engage in more effective trade.

According to Gnassingbé-Essonam, the presence of these trading companies has already begun to yield positive results. She noted that with the establishment of these companies, there has been an increase in AfCFTA-related trade, particularly among informal traders, who have often been excluded from the formal trade network due to financial and logistical barriers. This development is promising for the future of African SMEs, as it shows that the establishment of these companies has begun to make trade more accessible, especially for businesses that were previously unable to scale beyond their local markets.

The efforts being made by AfCFTA to strengthen the continent’s trade infrastructure reflect a broader commitment to improving the economic prospects of African SMEs. By creating the necessary support structures for these businesses, AfCFTA aims to facilitate smoother, more efficient trade across African borders. This, in turn, is expected to contribute to greater economic integration within Africa and help SMEs tap into new markets, thereby increasing the competitiveness of African businesses on the global stage.

In conclusion, the challenges faced by African SMEs in cross-border trade are substantial, but AfCFTA’s strategic push to create trading companies and provide essential logistical and financial support is a crucial step toward overcoming these hurdles. As these initiatives continue to expand, the hope is that more SMEs will be empowered to take full advantage of the opportunities presented by AfCFTA, leading to greater economic growth and regional integration.