Unlocking Africa’s Cross-Border Trade Potential: Challenges and Opportunities

Africa’s creative industries are facing a pivotal moment, with fashion entrepreneurs and small-to-medium enterprises (MSMEs) riding a surge in global demand. While the continent’s e-commerce market is projected to grow to $75 billion, over 70% of MSMEs remain hesitant to dive into cross-border trade. These statistics were brought to light at the third Ananse Africa Virtual Roundtable, where experts from the creative and financial sectors gathered to address critical barriers stifling Africa’s trade potential. This in-depth discussion revealed the urgency of building digital trust, strengthening payment systems, and streamlining the logistics ecosystem for sustainable growth.

Barriers to Scaling Africa’s E-Commerce Market

Despite the boom in e-commerce opportunities, MSMEs continue to grapple with systemic challenges that hinder intra-African trade. Key participants at the roundtable underscored the crippling costs associated with cross-border payments. Africa’s fragmented financial landscape—boasting over 277 mobile wallets and 500 banks—often results in transaction fees as high as 30%, rendering trade economically unviable for many entrepreneurs. Additionally, logistics challenges such as customs delays averaging 12 working days and transport costs consuming up to 60% of product value further compound the problem. At the heart of these barriers lies a significant lack of trust in payment and delivery assurances, leading to a stagnation in intra-African trade levels at just 16% of total merchandise trade.

Transformative Initiatives: Building Digital Infrastructure

Fortunately, transformative solutions are beginning to emerge. The Pan-African Payments and Settlement System (PAPSS) by Afreximbank stands out as a game-changer, allowing businesses to settle payments in local currencies and reduce transactional friction. Similarly, the bank’s ACDIRT tool facilitates trust by providing real-time verification of businesses. Meanwhile, innovative companies like Ananse are reducing shipping costs by aggregating demand and partnering with global logistics providers like DHL. These initiatives not only simplify cross-border trade but also enable entrepreneurs to focus on their core craft rather than navigating complex customs and financial processes.

A Call to Action: Harmonizing Policies and Digital Systems

Experts at the roundtable highlighted the critical need for governments to accelerate policy harmonization across the continent. Standardized customs processes and the removal of non-tariff barriers were identified as essential to creating a predictable and transparent trading environment. Another focus was on the development of a shared digital data infrastructure capable of real-time verification of payments and shipments. Such a system would not only build trust but also allow financial institutions to assess actual risks instead of perceived ones, thereby unlocking credit for MSMEs.

Integrating mobile money into the formal cross-border trade ecosystem remains a high priority, as MSMEs increasingly rely on these services for financial transactions. By creating verifiable transaction histories, mobile money could be a bridge to greater financial inclusion, simplifying onboarding processes and improving access to credit for small businesses across the continent. This integration could also strengthen settlement mechanisms, fostering deeper trust among trade participants.

The Stakes for Africa’s Creative Economy

With MSMEs representing 90% of African businesses and contributing nearly 50% of the continent’s GDP, unlocking this sector’s potential is vital for Africa’s broader economic success. Creative industries, such as fashion, have a unique opportunity to lead this charge by leveraging digital technologies and innovative logistical solutions. However, achieving this vision requires collaborative efforts from both the public and private sectors to address existing structural inefficiencies. As the roundtable concluded, the message was clear: the time to act is now if Africa is to claim its rightful place in the global trade ecosystem.