Small Businesses See AfCFTA as Key to Overcoming Market....

Samuel Mobolaji

A report from the Pan-African Manufacturers Association (PAMA) indicated that small and medium-sized industries (SMIs) in Africa are increasingly considering the African Continental Free Trade Area (AfCFTA) agreement as a crucial means to overcome the limitations of fragmented domestic markets.

The AfCFTA aims to create a single, unified market that will boost intra-African trade, eliminate tariffs, and enhance the continent’s competitiveness on a global scale.

Released to the media, the report highlighted that “small and medium-sized industries are essential to many economies, both high- and low-income. They account for a significant share of employment, public revenue, and industrial output growth, playing a critical role in promoting inclusive growth, reducing poverty, and stabilising economies. This importance is particularly notable in Africa, where SMIs represent approximately 80 to 90 per cent of employment, including jobs in the informal sector.”

The survey conducted for the report gathered insights from 207 respondents across various manufacturing sub-sectors, including food and beverages, textiles, rubber and plastics, and chemicals. It examined areas such as awareness levels, trade practices, challenges, and opportunities for SMIs in the context of AfCFTA, providing a clearer understanding of their readiness to participate and their expectations from the agreement.

The findings revealed a strong sense of optimism among SMIs regarding the potential benefits of AfCFTA. Key benefits highlighted include access to larger markets, lower trade costs, and opportunities for business growth. Notably, 96 per cent of respondents expressed their readiness to engage in intra-African trade. Many SMIs view AfCFTA as a key to overcoming the limitations posed by fragmented domestic markets and tapping into regional demand.

However, the report also pointed out significant barriers that could hinder SMIs’ full participation in the AfCFTA framework, saying that “these challenges include inadequate infrastructure, complex customs procedures, financial constraints, issues with product standardisation, low production volumes, and limited awareness of Afcfta’s provisions and protocols. Infrastructure deficits and poor logistics were identified as the most critical obstacles, affecting 34 per cent of the respondents.”

PAMA emphasised that “the AfCFTA has immense potential to drive economic transformation and industrial growth in Africa, particularly through the full participation and integration of SMIs.

“Despite these challenges, the report suggests that targeted interventions and collaborative efforts among policymakers, regional and development institutions, inter-governmental bodies, and industry stakeholders can help unlock the full benefits of a single market in Africa and foster the continent’s industrial transformation.”