Unlocking Africa’s Cross-Border Trade Potential: A Path to E-Commerce Growth

Africa’s entrepreneurial landscape is bustling with potential, especially in the creative and e-commerce sectors. Yet, outdated trade and financial structures continue to hinder cross-border trade efficiency. At the third Ananse Africa Virtual Roundtable, industry and financial sector leaders shed light on how aligned policies, better infrastructure, and increased digital trust can unlock Africa’s staggering cross-border trade potential. The event, themed Building Trust and Infrastructure for MSME Cross-Border Trade in Africa, showcased the challenges and actionable solutions for micro, small, and medium enterprises (MSMEs).

The Barriers to Intra-African Commerce

Despite a projected e-commerce growth to $75 billion, over 70% of African MSMEs are wary of engaging in cross-border trade. High payment costs, fragmented financial systems with 277 mobile wallets, and over 500 banks all discourage trade. Transaction fees alone can eat up as much as 30% of profit margins, severely restricting smaller businesses’ ability to scale.

Logistics challenges are another hurdle. Customs delays average 12 days while transportation costs can account for up to 60% of a product’s value. Perhaps even more detrimental is the lack of trust in Africa’s trade ecosystem—many entrepreneurs hesitate to engage in cross-border transactions due to fears over unreliable payments and delivery systems. With intra-African commerce making up only 16% of total trade, these systemic challenges highlight the need for robust, integrated infrastructure and policies.

Emerging Solutions and Innovations

Panellists at the roundtable spotlighted promising initiatives aimed at breaking these barriers. Afreximbank’s Pan-African Payments and Settlement System (PAPSS) is a critical development, introducing local currency settlements to reshape the fragmented payment ecosystem. Similarly, innovative tools like Afreximbank’s ACDIRT are bolstering trust by offering real-time business verification. These systems empower entrepreneurs to focus on their craft rather than wading through complex financial and regulatory obstacles.

Samuel Mensah, founder of Ananse, explained how their collaboration with logistics giants like DHL has streamlined shipping and reduced costs. These partnerships allow African businesses to aggregate demand, ensuring better reliability and affordability for cross-border trade. However, these efforts alone are not sufficient; stakeholders emphasized the need for further integration and harmonization of the African Continental Free Trade Area (AfCFTA) to build a predictable and fair trading environment.

Call to Action: Building a Digitally-Connected Africa

The discussions concluded with a strong call to action for governments and private sectors alike. Policymakers were urged to accelerate the synchronization of trade regulations and reduce non-tariff barriers to facilitate seamless economic activity. A unified digital infrastructure capable of real-time payment and shipment verification was identified as critical for fostering trust and enabling financial inclusion. By shifting financial institutions’ focus from perceived to actual risks, MSMEs could gain easier access to credit and investment opportunities.

Integrating mobile money services into formal trade systems could further simplify processes for small businesses, allowing them to build verifiable transaction histories. With 90% of African businesses classified as MSMEs, their growth holds the key to driving the continent’s broader economic ambitions. Bridging these gaps in trust, regulation, and infrastructure is paramount to unlocking the full potential of Africa’s booming trade and creative economy.

As the AfCFTA policies take root, and initiatives like PAPSS achieve wider adoption, Africa stands ready to reshape its e-commerce landscape. Streamlined processes and scalable business solutions can soon ensure that African MSMEs take a more central role in global markets while strengthening intra-African trade opportunities.