African Trade Ministers Convene in Cairo to Accelerate Continental Free Trade Area Implementation Amid Rising Global Trade Tensions

African trade ministers gathered in Cairo on Tuesday for the 17th Ministerial Meeting under Egypt’s presidency of the African Continental Free Trade Area (AfCFTA) Council, as the continent seeks to address persistent challenges that have kept intra-African trade at just 14-15% compared to Europe’s 60-70%. The high-level gathering, chaired by Egyptian Minister of Investment and Foreign Trade Hassan El-Khatib, focused on accelerating implementation of the world’s largest free trade agreement by participating countries.

The meeting convened at a critical juncture for African economic integration, with global trade tensions and shifting international relationships creating both challenges and opportunities for the continent’s $3.4 trillion economy. As traditional trading partners impose new barriers, Africa is increasingly looking inward to develop regional value chains and reduce dependency on external markets.

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Egypt’s Strategic Leadership Role

Egypt assumed the AfCFTA presidency in April 2025, succeeding Tanzania, positioning the North African nation at the forefront of continental integration efforts. El-Khatib, who brings over 35 years of experience in international investment and development banking, has made accelerating AfCFTA implementation a cornerstone of Egypt’s continental leadership agenda.

“The meeting comes at a critical time and reflects the commitment of African countries to advance the work of the AfCFTA, which is the main lever for enhancing economic integration and creating new jobs and investments,” El-Khatib emphasized during his opening address. The minister highlighted the stark disparity in regional integration, noting that while intra-European trade represents 60-70% of total commerce, Africa’s internal trade remains at just 14-15%, representing a “huge untapped opportunity” for the continent.

Under Egypt’s presidency, the focus has shifted toward resolving outstanding technical negotiations, particularly concerning rules of origin for vital sectors including automotive and textiles. These sectors are considered crucial for industrial integration and the development of regional value chains that could transform Africa’s economy from commodity dependence to value-added manufacturing.

Current State of African Trade Integration

The African Continental Free Trade Area, which entered into force in 2019 and began operations in January 2021, represents one of the most ambitious economic integration projects globally. With 48 countries having ratified the agreement, the initiative connects 1.3 billion people across a market with combined GDP of $3.4 trillion.

Recent data shows promising but uneven progress. Afreximbank’s African Trade Report 2025 revealed that intra-African trade rose to $192.2 billion in 2023, representing a 3.2% increase from the previous year. This growth raised the share of formal intra-African trade from 13.6% in 2022 to 14.9% in 2023, despite challenging global economic conditions.

The Guided Trade Initiative, which enables countries to begin trading under AfCFTA rules before full implementation, has seen 10 countries actively participating as of February 2025. These include major economies such as Nigeria, South Africa, Kenya, Ghana, and Egypt, demonstrating growing momentum toward practical implementation.

Addressing Structural Challenges

El-Khatib identified several fundamental obstacles hindering intra-African trade expansion, including weak connectivity, high shipping costs, inadequate shipping lines and distribution hubs, and limited financing. These challenges reflect broader infrastructure deficits that have historically constrained African economic integration.

Transportation costs remain prohibitive, with cross-border road transport in Africa not only more expensive than alternative modes but also susceptible to border delays and unofficial tolls. The continent’s logistics performance trails global benchmarks by 20-30%, contributing to trade costs that are significantly higher than other regions.

Infrastructure investment needs are substantial. According to the Global Infrastructure Hub, Africa requires over $6 trillion in new investments between 2022 and 2040 to meet infrastructure demand. The African Development Bank has been actively supporting this agenda, having funded 25 transport corridors and constructed more than 18,000 km of roads, 27 border crossings, and 16 bridges, representing $13.5 billion in investments.

Industrial Localization and Manufacturing Focus

A central theme of the Cairo meeting was the imperative for industrial localization and manufacturing development. El-Khatib emphasized that while Africa possesses abundant natural resources, rare minerals, and human capital, the continent must focus on localizing industries and promoting manufacturing to achieve sustainable development.

This shift toward value-added production represents a critical component of the AfCFTA’s long-term vision. The World Bank projects that full AfCFTA implementation could increase Africa’s exports by $560 billion, with the majority coming from manufacturing rather than traditional commodity exports.

The focus on automotive and textile sectors for rules of origin negotiations reflects their potential as catalysts for broader industrialization. These industries offer opportunities for regional value chain development, technology transfer, and job creation, particularly for young Africans entering the workforce.

Digital Trade and Payment Systems Innovation

The meeting also highlighted the crucial role of digital transformation in facilitating trade growth. The Pan-African Payment and Settlement System (PAPSS), developed in collaboration with Afreximbank, represents a significant innovation in addressing payment challenges that have historically hindered intra-African commerce.

Digital trade protocols adopted in February 2025 provide frameworks for electronic transactions, digital services, and technology-enabled trade facilitation. These developments are particularly important given that Africa’s digital economy is expanding rapidly, with internet users in sub-Saharan Africa increasing by 115% between 2016 and 2021.

Egypt has been particularly active in promoting digital payment systems integration, recognizing that modern, efficient payment mechanisms are essential for reducing transaction costs and formalizing cross-border trade that currently occurs through informal channels.

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Private Sector Engagement and Investment Climate

El-Khatib stressed the importance of greater private sector involvement in driving African integration, noting that supportive legislation and infrastructure are needed to activate the AfCFTA agreement and boost competitiveness of African products. This emphasis reflects recognition that successful trade integration requires not just government agreements but active business participation.

The African Development Bank has facilitated over 3,000 business transactions across 170 financial institutions in African countries, with cumulative commercial value exceeding $12 billion since launching its trade finance program. However, a trade finance gap estimated at $100 billion continues to constrain business expansion and cross-border commerce.

Afreximbank plans to double its funding for intra-African trade to $40 billion by 2026, representing a significant commitment to addressing financing constraints. The bank disbursed more than $17.5 billion in trade finance in 2024, demonstrating growing capacity to support continental integration.

Global Context and External Pressures

The Cairo meeting occurred against a backdrop of shifting global trade dynamics that both challenge and motivate African integration efforts. Rising protectionism in major economies, including proposed U.S. tariffs and existing EU trade barriers, has prompted African leaders to accelerate inward-looking trade strategies.

Citigroup analysis suggests that proposed U.S. tariffs could hasten Africa’s reorientation toward China and the European Union as primary trading partners, while simultaneously encouraging greater intra-African commerce. This external pressure creates urgency around AfCFTA implementation as a means of reducing dependency on volatile international relationships.

The expiration of the African Growth and Opportunity Act (AGOA) in September 2025 has further focused attention on alternative trade strategies. While AGOA has provided benefits to participating African countries, its utilization has been uneven, with sub-Saharan Africa accounting for less than 1% of total U.S. imports in 2021.

Economic Impact Projections and Development Goals

The World Bank estimates that full AfCFTA implementation could lift 30 million Africans out of extreme poverty and boost incomes of nearly 68 million others living on less than $5.50 per day. The agreement has potential to boost Africa’s income by $450 billion by 2035, representing a 7% gain while adding $76 billion to global income.

These projections depend heavily on addressing the structural constraints highlighted at the Cairo meeting. Trade facilitation measures that cut red tape and simplify customs procedures would drive $292 billion of the projected $450 billion in potential income gains, underscoring the importance of administrative and procedural reforms.

The United Nations Economic Commission for Africa projects a 35% increase in intra-African trade by 2045 following full AfCFTA implementation, with particular benefits for manufacturing and services sectors that have been underrepresented in Africa’s traditional export portfolio.

Sectoral Priorities and Value Chain Development

The Cairo meeting emphasized four priority sectors identified through collaboration with international partners including the World Economic Forum: manufacturing, agriculture and food processing, digital economy, and renewable energy. These sectors offer high returns on investment, significant job creation potential, and particular opportunities for youth and small-to-medium enterprise inclusion.

Manufacturing development remains central to AfCFTA objectives, with the agreement designed to steer economies away from commodity export dependence toward value-added industries. While some progress has been achieved, expected diversification has been slow to materialize, highlighting the need for continued policy focus and investment.

Agricultural trade represents particular potential, given that intra-regional food trade in Asia and Europe reaches close to 60%, while Africa’s remains below 20%. The 2014 Malabo Declaration encouraged tripling intra-African agricultural trade by 2025, though progress has been disappointing due to policy implementation challenges and trade barriers.

Regional Infrastructure Corridor Development

El-Khatib emphasized that enhancing continental infrastructure in transport, communications, and logistics represents a prerequisite for connecting African markets and facilitating goods, services, and capital flows. This requires mobilizing private sector investment through attractive investment environments and expanding partnerships with development banks.

The African Development Bank’s corridor strategy has been central to integration efforts. Between 2004-2022, the bank funded main and connecting sections of seven strategic trade corridors in southern and eastern Africa, totaling 7,150 km of roads. These investments demonstrate the practical foundation needed for trade expansion.

Regional economic communities have played important roles in preparing for AfCFTA implementation, though their overlapping memberships and sometimes conflicting policies have created complications. The complex web of different trade policies, including export and import bans, varying tariff structures, and differing food safety regulations, has created an 8.7% protection rate for intra-African trade compared to just 2.5% faced by African exporters in international markets.

Financial Architecture and Payment Systems

The development of integrated financial systems represents a crucial enabler for trade expansion. The Pan-African Payment and Settlement System launch represents significant progress in enabling real-time, cross-border transactions in local currencies, though widespread adoption and interoperability with national systems remain works in progress.

Credit rating systems improvement, enhanced financial literacy, and facilitated cross-listings among African stock exchanges could deepen financial integration. The Alliance of African Multilateral Financial Institutions is increasing development funding and helping rebuild financial ecosystems that work more effectively for African businesses and consumers.

Access to trade finance remains particularly challenging for small and medium enterprises that represent the majority of African businesses. Addressing this constraint requires both expanding traditional banking services and developing alternative financing mechanisms suited to African market conditions.

Implementation Timeline and Next Steps

Egypt’s presidency of the AfCFTA ministerial council extends through 2025, providing continuity for ongoing negotiations and implementation efforts. El-Khatib proposed developing a short-term roadmap to achieve tangible results serving all member states’ interests, with particular focus on finalizing rules of origin for automotive and textile sectors.

The minister suggested adopting transitional rules that could be implemented gradually over specified periods, allowing countries to build capacity while beginning to capture trade benefits. This pragmatic approach reflects recognition that full implementation will take time while ensuring momentum is maintained.

AfCFTA Secretary-General Wamkele Mene has emphasized that the agreement represents a tool to reverse historical trade patterns by leveraging a market of 1.4 billion people. Current progress shows remarkable achievement given the complexity of negotiating among 55 countries, though continued political commitment and technical progress remain essential.

Strategic Vision and Continental Unity

El-Khatib concluded the ministerial meeting by reaffirming Egypt’s “unwavering commitment to the continent,” stating that “Africa is the heart and the future” and that AfCFTA success depends on “transforming planning into implementation.” This emphasis on practical progress over political declarations reflects broader recognition that the agreement’s potential can only be realized through concrete action.

The principle of mutual gain emphasized throughout the discussions reflects growing understanding that successful regional integration requires benefits for all participants rather than zero-sum competition. This approach becomes particularly important as the continent seeks to present a unified voice in global trade negotiations while addressing internal development disparities.

As African trade ministers returned to their capitals following the Cairo meeting, the continent faces both unprecedented opportunities and significant challenges in realizing the AfCFTA’s transformative potential. Success will depend on sustained political commitment, continued technical progress, substantial infrastructure investment, and growing private sector engagement in building the integrated African economy envisioned by the agreement’s architects.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

17th September, 2025