A path to growth and integration: SA’s commitment to AfCFTA amidst regional challenges
- A platform where even landlocked nations like Lesotho will thrive in a united continental market
TEBOHO KHATEBE MOLEFI
South Africa has reaffirmed its commitment to harnessing the African Continental Free Trade Area (AfCFTA) to unlock new growth opportunities for local businesses and strengthen regional integration.
But this comes as her neighbour, Lesotho, faces significant challenges in implementing the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) due to geographical constraints, limited infrastructure and economic dependencies.
The AfCFTA, launched in 2021, aims to create the world’s largest free trade zone, covering 54 African nations and a combined GDP of $3.4 trillion. However, its full potential remains unrealized due to slow implementation, infrastructure deficits and political instability.
South Africa, as Africa’s most industrialized economy, is positioning itself as a key driver of intra-African trade, while also addressing the structural barriers that hinder smaller economies like Lesotho.
The AfCFTA seeks to boost intra-African trade, which currently stands at just 13 percent of the continent’s total trade – far below Europe’s 68 percent and Asia’s 58 percent. By eliminating tariffs on 90 percent of goods and reducing non-tariff barriers, the agreement could increase intra-African trade by 52 percent by 2025 and add $450 billion to Africa’s GDP by 2035, economic experts say
South Africa stands to benefit significantly from this integration. The country’s manufacturing and industrial sectors, particularly automotive and agro-processing, could expand their market reach across the continent. The AfCFTA also presents an opportunity for South Africa to reduce its reliance on traditional export markets like the European Union (EU) and China, diversifying its trade partnerships within Africa.
South Africa’s proactive engagement in AfCFTA – through policy alignment, investment in logistics and digital trade platforms – can serve as a model for smaller economies like Lesotho as by fostering regional collaboration, South Africa, hopefully, aims to create a more resilient and integrated African market, ensuring that no country is left behind in the continent’s trade transformation.
Lesotho’s struggles with trade facilitation
While South Africa advances its AfCFTA agenda, Lesotho – landlocked and heavily dependent on South Africa for 80 percent of its imports – faces persistent trade bottlenecks, according to Private Sector Foundation of Lesotho CEO, Thabo Qhesi.
Qhesi says the country’s efforts to implement the WTO’s TFA have been hampered by lack of direct sea access forces reliance on South African ports, leading to delays and high transport costs, poor road networks, outdated customs systems and unreliable electricity hinder efficient cross-border trade.
He also points to economic dependencies – with the local economy heavily reliant on textiles, supported by AGOA and diamond exports, making it vulnerable to external shocks.
“Lesotho’s landlocked status means it relies entirely on South African ports such as Durban for international trade. This dependence creates transit bottlenecks, including delays at border posts and port congestion, which increase trade costs and hinder compliance with TFA Article 11 – freedom of transit.
These high transport costs and delays reduce Lesotho’s trade competitiveness, particularly for time-sensitive goods and complicate the seamless movement of goods as required by the TFA,” he said.
He also pointed to inadequate physical infrastructure, with poor road infrastructure and limited access to reliable electricity, increasing transit times and costs. Lesotho’s small international airport further restricts direct access to global markets, forcing reliance on South African transport networks.
“Inefficient infrastructure undermines TFA objectives like streamlining border procedures (Article 10) and ensuring efficient transit (Article 11), as goods face delays due to substandard transport facilities.”
Qhesi noted with concern Lesotho’s weak implementation of regional and TFA instruments, highlighting the country’s struggles with implementing Southern African Customs Union – SACU) and TFA measures due to limited institutional capacity, insufficient inter-agency cooperation and outdated customs technologies. For example, the Lesotho National Trade Facilitation
Committee (NTFC) faces challenges in coordinating responses to trade disruptions, such as those caused by Covid-19.
The Covid-19 pandemic exposed vulnerabilities in Lesotho’s trade facilitation, with disruptions in supply chains and border operations. The NTFC struggled to address these issues due to limited coordination and resources, affecting transit continuity.
He said this leads to slow adoption of TFA measures like single windows (Article 10.4), risk management (Article 7.4) adding that border agency cooperation (Article 8) hinders efficient customs clearance and transit processes.
“Complex customs procedures, protective tariffs, and requirements for import permits for restricted goods like agricultural products create non-tariff barriers. These barriers increase trade costs and delay transit, conflicting with TFA goals of transparency (Article 1) and simplified formalities (Article 10).
Lesotho’s customs and trade systems also lag in digitalization, with manual processes and limited use of information and communication technologies (ICT).
The absence of a fully functional single window system and outdated customs IT infrastructure impede efficient trade processing – and this slows down customs clearance, increases errors, and limits compliance with TFA requirements for digital trade facilitation (e.g. Article 10.4 on single windows),” Qhesi notes.
He continued that as a least developed country (LDC), Lesotho faces resource constraints, including insufficient funding for infrastructure upgrades and capacity-building for customs officials.
The slow pace of TFA implementation – 22.8 percent for LDCs globally – reflects these financial and technical limitations. And that these limited resources hinder the country’s ability to meet TFA commitments, particularly for costly reforms like modernizing customs systems or establishing efficient transit corridors.
“Such shocks exacerbate delays and costs, undermining TFA goals of resilience and efficient trade flow during crises.”
A December 2024 study by Oluwafemi O Ojo and Ojo J Adelakun titled ‘Global market opportunities for SMEs: Export/Import perceptions and trade growth in Lesotho’ has also found that cumbersome export/import procedures, including lengthy customs processing and high trade finance costs, discourage small and medium enterprises (SMEs) from engaging in regional trade.
The study reveals that favourable perceptions of export/import ease significantly impact SMEs’ willingness to engage in cross-border trade. Key findings indicate that export constraints such as competitiveness, standard compliance and informal restrictions lower SME trade participation.
In contrast, import constraints such as legal requirements, access to trade finance and foreign market information increase participation, highlighting the importance of niche markets and domestic competitiveness.
Furthermore, the ease of doing trade positively impacts trade performance, as represented by sales.
The research concluded that policymakers can use these findings to improve trade facilitation policies tailored to SME needs, creating a more favourable trading environment.
South Africa’s role in bridging the gap
Recognizing that regional integration cannot succeed in isolation, South Africa is taking steps to support neighbouring economies like Lesotho. They are collaborating on regional projects such as the Lobito Corridor Railway, linking Angola, Zambia and the Democratic Republic of Congo, which could eventually extend to Southern Africa.
There is also the Tanzania-Zambia Railway rehabilitation, improving connectivity for landlocked nations, while also advocating for the Trans-African Highway Network, which is likely to enhance road transport efficiency.
To address bureaucratic inefficiencies, South Africa is also promoting digital trade platforms like the Pan-African Payment and Settlement System (PAPSS), enabling cross-border transactions in local currencies. Customs digitization, to reduce paperwork and delays at borders.
South Africa is, in the same vein, pushing for streamlined trade regulations that include simplified rules of origin to prevent trade diversion, and harmonized SADC and AfCFTA trade protocols to reduce overlapping requirements.
However, despite these efforts, significant hurdles such as the slow AfCFTA implementation, financial gaps and climate and sustainability pressures remain. Only 31 of 48 ratified countries have initiated trade under AfCFTA, and with political instability and conflicts delaying progress, Africa still faces an annual trade finance shortfall of $81 billion, limiting SME participation and extreme weather events disrupt supply chains, while the EU carbon regulations (CBAM) pose new compliance challenges for African exporters.
But for AfCFTA to succeed, South Africa must accelerate infrastructure investments, particularly in transport and energy. Strengthen partnerships with smaller economies like Lesotho to ensure inclusive growth as well as leverage digital innovation to streamline cross-border trade.
As Hippolyte Fofack, Chief Economist at Afreximbank, notes, “The AfCFTA is not just about trade – it’s about building ‘Factory Africa,’ where value chains are continental, not just national.”
This reaffirmed commitment to harnessing the AfCFTA to unlock new growth opportunities for local businesses and strengthen regional integration has been seen at the Intra-African Trade Fair (IATF) 2025 South Africa Business Roadshow in Johannesburg, South Africa, during which Humphrey Nwugo, Regional Director (Southern Africa) at African Export-Import Bank (Afreximbank), emphasised the urgency of mobilising concrete action.
“This is the time to ensure that South Africa’s public and private sectors are not only present but strategically positioned to seize the immense opportunities that IATF 2025 will present.”
Nwugo underscored South Africa’s pivotal role in the continent’s integration journey, citing its strong economic foundations, entrepreneurial energy, and institutional capacity – well positioned to integrate into African value chains.
“We are here to invite South Africa to lead. We want to see the country’s private sector on full display in Algiers,” he added.
The IATF 2025, set to take place in Algiers from September 4 to 10, is poised to be a landmark market event and gateway to unprecedented trade and investment prospects across Africa.
Wamkele Mene, Secretary General of the AfCFTA Secretariat, highlighted the critical importance of IATF 2025, taking place amid global instability, climate change and shifting trade dynamics.
“Despite these headwinds, Africa has the capacity to navigate the challenges, accelerate industrial development, and realise the vision of a fully integrated continent,” he said.
He stressed the urgency of building regional value chains in sectors like automotive and agribusiness, which offer vast potential for inclusive growth. Strengthening these interconnected ecosystems will support technology transfer, diversify intra-African trade, and create new opportunities for small and medium enterprises across the continent.
Speaking at the event, Sihle Zikalala, South African Deputy Minister of Public Works and Infrastructure, noted the republic’s strong positioning to drive industrialisation, innovation, and regional value chain development.
“South Africa views the AfCFTA as a historic opportunity to deepen economic ties with our neighbours, expand market access for our goods and services, and promote inclusive, job-rich growth,” said Minister Zikalala.
“The IATF 2025 must be viewed as more than just a marketplace, and rather as a strategic tool for implementation, where policy meets practice. South Africa has a critical role to play in driving this vision, underpinned by entrepreneurial spirit, institutional strength, and a dynamic SMME ecosystem.
Through partnerships and public-private collaboration, we can develop world-class infrastructure across Africa while reducing our reliance on foreign exchange by trading in our own currencies,” he added.
Baleka Mbete, founder NaLHISA and former Deputy President of the Republic of South Africa was also in attendance.
The Roadshow convened over 350 business leaders, policymakers, creatives, and investors, as well as senior representatives from Afreximbank, the African Union Commission (AUC), and the AfCFTA Secretariat.
Themed “Harnessing regional and continental value chains: Accelerating Africa’s industrialisation and global competitiveness under the AfCFTA,” the event spotlighted strategies to build resilient supply chains and boost intra-African trade.
Accelerating intra-African trade is pivotal to unlocking industrial opportunities tailored to the continent’s strengths. It reduces dependence on external markets, builds economic resilience, and enables value addition within Africa.
When African nations trade more with one another, they retain more wealth, create higher-quality jobs, and foster inclusive growth through regional value chains.
With the AfCFTA creating a single market of 1.4 billion people, Africa gains the scale and efficiency needed to compete globally.
A stronger internal market also improves the continent’s bargaining power in international negotiations, strengthens its integration into global supply chains, and sets the stage for long-term economic transformation.
South Africa’s strong industrial base, advanced financial sector, and world-class infrastructure position it as a regional anchor for AfCFTA implementation.
According to the South African Revenue Service and UN COMTRADE, South Africa recorded merchandise exports of $110.5 billion and imports of $113.2 billion in 2023, resulting in a modest trade deficit of $2.7 billion. Trade made up 65.7 percent of GDP (World Bank, 2013), demonstrating South Africa’s deep integration into global markets.
Notably, intra-African trade remained a national strength. As reported in Afreximbank’s 2024 African Trade Report, South Africa exported $29.6 billion and imported $9.6 billion from African partners, with intra-African exports comprising 26.8 percent of total exports.
Key sectors such as automotive, agro-processing, and financial services are already benefiting and poised to grow further through regional integration and value chain expansion.
Speaking at the roadshow, Dr Gainmore Zanamwe, Director, Trade Facilitation and Investment Promotion, Afreximbank, highlighted ongoing efforts to enable seamless intra-Africa trade: “Afreximbank is deeply committed to unlocking Africa’s industrial and trade potential by building enabling ecosystems from financing to infrastructure and standards.
Through platforms like the Africa Trade Gateway and Pan-African Payment and Settlement System, we are removing long-standing barriers to intra-African trade, allowing businesses to transact in local currencies and access real-time market intelligence.”
Dr Zanamwe also emphasised the growing role of South Africa and Algeria in regional value chains, especially in manufacturing and automotive sectors. He encouraged South African companies to participate actively in IATF 2025, pointing to over $13 billion in EPC (Engineering, Procurement and Construction) contracts facilitated by Afreximbank.
He also highlighted funding vehicles such as the Fund for Export Development in Africa, the Africa Direct Investment Initiative, and the $2 billion Export Agriculture for Food Security programme.
“IATF 2025 is not just an exhibition – it’s a business gateway. With 2 000+ exhibitors, 35 000 visitors, and 140+ participating countries, we project over $44 billion in trade and investment deals. This is South Africa’s opportunity to lead,” he said.
In closing, Ambassador Ali Achoui, Algeria’s Ambassador to South Africa, extended a warm invitation to South African businesses: “Welcome to Algeria – a country with the third-largest GDP in Africa, no external debt, and ranked first in Africa and the Arab world in achieving the United Nations Sustainable Development Goals.
We are proud to host IATF 2025 and are committed to facilitating streamlined visa processes by reducing documentation requirements to ease access for all African participants.”
Since 2018, IATF has secured more than $100 billion in trade deals, welcomed over 70 000 visitors, more than 4 500 exhibitors and has become Africa’s most influential trade and investment platform.
Organised by the Afreximbank, in collaboration with the AUC and the AfCFTA Secretariat, the IATF is designed to boost intra-African trade and investment. It provides a unique platform for businesses to connect, exchange trade and market information, and explore opportunities to scale across Africa.
IATF is open to African and global companies committed to supporting the continent’s industrialisation and transformation.
South Africa’s renewed commitment to AfCFTA signals a strategic shift toward regional self-reliance. However, the agreement’s success hinges on addressing the disparities between Africa’s industrial powerhouses and its vulnerable economies.
By fostering collaboration, investing in connectivity, and reducing trade barriers, South Africa can help unlock a new era of African prosperity – one where even landlocked nations like Lesotho thrive in a united continental market.
