African businesses are setting their sights firmly on the continent’s internal market, viewing cross-border expansion as a primary engine for growth. Yet, a formidable wall of financial and institutional barriers threatens to stifle these ambitions. According to preliminary findings from the 2026 PAFTRAC Africa CEO Trade Survey—unveiled at the World Trade Organisation (WTO) Public Forum in Geneva—staggering financing deficits, expensive capital, and gaps in trade facilitation tools are holding back the full promise of the African Continental Free Trade Area (AfCFTA).
The survey, which captured insights from over 2,500 business executives across the continent, reveals robust enthusiasm for regional commerce. A striking 81.3 per cent of corporate leaders expect their cross-border activities to increase over the coming year, positioning intra-African trade higher on their expansion priorities than traditional markets in China, Europe, or the United States.
However, enthusiasm is clashing sharply with commercial reality. Despite these high ambitions, intra-African merchandise trade languishes at just 15 to 18 per cent of the continent’s total exports. The root cause, business leaders argue, lies in an acute lack of affordable financial plumbing.
At the heart of the crisis is access to liquidity. More than half—57 per cent—of surveyed executives reported that securing trade finance for cross-border transactions is difficult or very difficult.
This tightness is heavily exacerbated by inflated borrowing costs. Citing analysis from the International Finance Corporation (IFC), the PAFTRAC report highlights that African sovereign and institutional borrowers face an estimated $31 billion annually in excess financing costs. These punitive expenses are largely driven by a systemic overpricing of African risk, a burden that inevitably trickles down to commercial enterprises, elevating the cost of capital for production, investment, and trade.
Small and medium-sized enterprises (SMEs), which form the backbone of economies like Nigeria and other major African markets, bear the brunt of this credit crunch. The IFC estimates Africa’s SME financing gap at a massive $331 billion. Without affordable credit, countless small businesses find themselves structurally locked out of regional supply chains. Compounding this is a parallel trade-finance deficit; research focused on just four West African economies uncovered a $14 billion annual shortfall, proving that injecting liquidity and reducing transaction costs could instantly catalyze regional merchandise trade.
Beyond pure financing, the survey underscores a secondary hurdle: institutional friction and a lack of awareness regarding trade facilitation mechanisms.
While nearly 70.2 per cent of business leaders acknowledge that AfCFTA-related reforms have already produced a tangible, positive impact on their operations, a critical knowledge gap remains. Over half of the respondents were unfamiliar with the Pan-African Payment and Settlement System (PAPSS)—a vital infrastructure designed to clear and settle intra-African trade transactions in local currencies, thereby reducing a heavy reliance on hard currencies. Awareness of other trade-facilitation tools similarly lagged.
The findings paint a vivid picture of a continent caught in a policy conundrum. African entrepreneurs are more than ready to trade with one another, driven by a shared vision of a unified market. Yet, high financing costs, a $331 billion SME funding abyss, and uneven navigation of AfCFTA protocols create heavy drag.
Ultimately, building continental trade architecture on paper is no longer enough. For AfCFTA to deliver the profound regional integration its architects envisioned, policymakers and financial institutions must aggressively dismantle these monetary and structural barriers—lowering risk premiums, expanding trade finance access, and popularizing payment tools like PAPSS to turn private-sector ambition into real economic output.
