Africa holds some of the fastest-growing economies in the world. However, trading between African countries remains a challenge for many businesses. High import duties, complicated customs procedures and transport costs often make it difficult for businesses to sell their products beyond their home countries.
The African Continental Free Trade Area (AfCFTA) aims to change this by making trade between African countries easier and more affordable. For South African small and medium enterprises (SMEs), the agreement provides an opportunity to reach new customers, access suppliers and expand into African markets without facing some of the traditional trade barriers.
In this article, we’ll go through the necessary details to help you understand how the agreement works, which products qualify and what is required to benefit from reduced import duties.
What Is the African Continental Free Trade Area?
The African Continental Free Trade Area is a trade agreement established by the African Union (AU) to create a single market for goods and services across Africa. The primary objective of the objective is to reduce trade barriers between participating African countries and encourage businesses to trade more within the continent.
As of September 2026, 54 African countries had signed the agreement, with 50 having ratified it. Somalia became the 50th country to formally ratify the agreement on 4 September 2026. This makes AfCFTA one of the largest free trade areas in the world by number of participating countries.
According to the World Bank, full implementation of AfCFTA, alongside reforms covering investment and competition, could generate income gains of up to $571 billion and uplift 50 million Africans out of extreme poverty by 2035.
How Does the African Continental Free Trade Area Work?
The AfCFTA works by gradually removing or reducing tariffs on goods traded between participating countries. Under AfCFTA, participating countries have agreed to gradually eliminate tariffs on 90% of tariff lines. However, these reductions are being introduced in stages, and not all products qualify for duty-free trade.
Businesses must check the applicable tariffs and rules of origin before exporting. The agreement also addresses other challenges, including:
- Customs procedures: Simplifying the documentation and processes required to move goods across borders.
- Trade regulations: Improving cooperation between countries to reduce unnecessary trading restrictions.
- Market access: Creating opportunities for African businesses to sell products and services in participating countries.
- Trade disputes: Providing mechanisms to resolve disagreements between participating countries.
- Investment: Supporting policies that encourage economic growth and business expansion.
One important detail is that reduced tariffs do not automatically eliminate transport costs, local taxes or product certification requirements. A business exporting food products, for example, may still need to comply with the destination country’s food safety regulations.
What Are the Benefits of AfCFTA for South African SMEs?
The African Continental Free Trade Area offers several opportunities for South African businesses looking to expand into other African markets.
1. Access to New Markets
One of the main benefits of AfCFTA is the opportunity for businesses to reach customers beyond South Africa. This allows businesses to diversify their customer base and potentially increase sales. However, entering another market still requires research into customer demand, local competition and purchasing behaviour.
2. Reduced Import Duties
Lower tariffs can make qualifying South African products more competitive in participating African markets.
These reduced costs could allow the business to offer more competitive prices or improve its profit margins. Businesses should confirm the applicable tariff using the AfCFTA eTariff Book before exporting.
It is also important to compare AfCFTA benefits with existing regional trade agreements. South Africa already trades with several African countries under the Southern African Development Community (SADC) Trade Protocol.
3. Opportunities for Local Manufacturers
AfCFTA could create additional demand for products manufactured in South Africa, including processed foods, clothing, chemicals and machinery. It may also encourage businesses to purchase materials from suppliers in other African countries.
This allows African businesses to participate in regional production networks rather than relying entirely on overseas suppliers.
4. Business Growth and Employment
Access to larger markets provides SMEs with the chance to increase production, generate more income, invest in equipment and grow their businesses by employing more workers.
The agreement also opens possibilities for businesses offering services such as transport, logistics, financial services and tourism.
How Can South African SMEs Trade Under AfCFTA?
South Africa officially launched preferential trade under AfCFTA on 31 January 2024, when the first shipments were dispatched to Ghana and Kenya.
According to the South African Revenue Service (SARS), businesses must meet the relevant registration requirements before trading under the agreement. This includes registration as an exporter or producer under AfCFTA, where applicable.
Since 1 November 2025, businesses have been able to submit these applications through the SARS Registration, Licensing and Accreditation (RLA) system.
Businesses interested in exporting under AfCFTA should follow these steps:
- Identify your target market. Research countries where there is demand for your products and establish whether preferential trade arrangements are operational.
- Check your product’s tariff classification. Identify the correct Harmonised System (HS) code and applicable import duty.
- Confirm the rules of origin. Determine whether your product qualifies as originating from an AfCFTA participating country.
- Register with SARS. Complete the relevant exporter or producer registration requirements.
- Prepare export documentation. Obtain the required certificates, customs declarations and supporting documents.
- Calculate export costs. Consider freight, insurance, customs charges and other expenses before setting prices.
Businesses can also contact the Department of Trade, Industry and Competition for information about participating in AfCFTA.
Understanding the Rules of Origin Under AfCFTA
One requirement that deserves particular attention is the rules of origin. These rules determine whether goods qualify as products originating from a participating African country.
For example, importing finished clothing from outside Africa and simply repackaging it in South Africa does not automatically make the clothing eligible for AfCFTA tariff preferences.
Products must meet the specific origin requirements applicable to their classification. This distinction matters for businesses that import materials, manufacture products locally or rely on suppliers from several countries.
What Are the Challenges of AfCFTA?
While the agreement offers several opportunities, SMEs must ensure they are aware of several challenges that could affect businesses.
1. Transport infrastructure: This remains a major concern. Poor roads, border delays and expensive freight services can increase the cost of moving goods between African countries.
2. Operational Difficulties: Businesses may also encounter different product standards, language barriers and difficulties receiving international payments.
Additionally, businesses may be faced with the challenge of implementation. Not every participating country has completed the processes required to apply preferential tariffs to every qualifying product.
The AfCFTA online trade barriers platform provides a way for traders to report certain obstacles encountered when moving goods across borders.
