African businesses increasingly want to expand across their national borders. However, high financial costs, limited trade finance, and key implementation gaps threaten the African Continental Free Trade Area (AfCFTA.

Preliminary findings from the 2026 PAFTRAC Africa CEO Trade Survey presented at the World Trade Organization (WTO) Public Forum in Geneva highlight these growing barriers to free trade integration in Africa.

The survey reveals that 81.3% of executives expect their cross-border business activities to increase over the next twelve months. This statistic points to a massive growing interest in African commercial markets.

In fact, surveyed executives now rank intra-African trade as their top expansion destination ahead of China, Europe, and the United States.

Financing Barriers and the SME Credit Gap

Despite strong corporate interest, 57% of respondents state that accessing trade finance for cross-border transactions remains difficult or very difficult. Consequently, severe financial constraints prevent companies from taking full advantage of the AfCFTA agreement.

Intra-African commerce currently accounts for only 15% to 18% of the continent’s total exports. A major factor driving this gap is the high cost of capital:

• Excess Financing Costs: Citing International Finance Corporation (IFC) data, PAFTRAC notes that African borrowers face $31 billion annually in extra financing costs due to perceived risk pricing.
• Massive SME Credit Deficit: Small and medium enterprises struggle the most. The IFC estimates Africa’s SME financing gap at over $331 billion.
• Trade Finance Shortfalls: In four West African nations alone, annual trade finance shortfalls reach $14 billion. Reducing these costs would immediately boost merchandise trade.

Diplomatic Tensions Threaten Free Trade Integration in Africa

Financial issues are not the only roadblock. Diplomatic tensions between South Africa and Nigeria—the continent’s two largest economies—pose a severe threat to free trade integration in Africa. Recent xenophobic attacks targeting Nigerian nationals in South Africa have damaged bilateral relations.

In May, Nigerian lawmakers recommended reviewing bilateral relations, aviation agreements, and business permits for South African companies. By September, the Nigerian parliament suspended participation in legislative activities hosted by South Africa. Official figures show that 1,695 Nigerians voluntarily returned home in 2026 amid rising xenophobic violence. Furthermore, Nigerian officials report that 98 citizens died in hate-related incidents between 2022 and 2026.

If diplomatic and commercial ties fracture between Africa’s main oil producer (Nigeria) and its chief industrial power (South Africa), the AfCFTA risks existing only on paper. A connected market of 1.3 billion people worth $3.4 trillion in GDP cannot function without cooperation between its primary economic drivers.

Unlocking the Potential of Intra-African Trade

To safeguard continental integration, Pretoria must actively engage Abuja. South African authorities must address xenophobic violence through education and bring perpetrators to justice. Ultimately, how South Africa handles its relations with key partners like Nigeria, Ghana, Kenya, and the DRC will determine its leadership role in the unified African market.