Seven years after AfCFTA: Why capital still hasn't truly flowed into the African continent

A Symbolic Export Reveals the Truth About Capital

In June 2025, Namibia made its first shipment of 25,000 tonnes of salt to Nigeria under the AfCFTA. It was seen as a milestone for the African single market, but what capital really cares about is: behind this deal, is Africa developing structural forces that can attract long-term capital?

The African Development Bank, the World Bank and UNCTAD have repeatedly emphasized the potential benefits of the AfCFTA. Yet seven years on, the result of capital voting with its feet is that intra-African trade has long hovered between 15% and 21% of global trade, while intra-Asian trade already accounts for 60%. The main direction of Africa's capital outflows and inflows remains vertical linkages with external partners such as China, the United States and Europe, rather than horizontal coordination among African countries.

Why Has Capital Not Flowed into Intra-African Markets at Scale Because of the AfCFTA?

1. Infrastructure Deficit: The Ceiling on Capital Returns

The AfCFTA agreement itself does not build a railway or a port. The physical bottlenecks of intra-African trade — sparse railway networks and underinvestment in port facilities — remain. Some countries have turned to China for financing to build ports and railways, but in most cases this strengthens, rather than reduces, dependence on external trade partners. Capital is profit-driven; missing infrastructure means high transport costs and poor timeliness for goods, making the capital return on internal trade far lower than on intercontinental trade.

2. Insufficient Political Will: Rule Uncertainty Is the Natural Enemy of Capital

The principle of the AfCFTA is to open domestic frameworks to regional partners, but many governments prefer to maintain existing "customer-style" trade relationships with external partners to consolidate their domestic rule. Intellectual property protection and transparent, predictable rules vary across countries. For capital, legal uncertainty and policy reversals create a higher risk premium than tariffs.

3. Fear of Losing Tariff Revenue: The Short-Term Rationality of Fiscally Weak States

For fiscally vulnerable countries, joining the AfCFTA means losing tariff revenue and aggravating fiscal pressure in the short term. This fear makes many countries prefer smaller regional trade blocs (such as SACU and COMESA) because their functions and constraints are more predictable. Capital can adapt to high tariffs, but it has difficulty adapting to persistent policy swings.

Where Does Capital Actually Flow? Resource Exports and External Supply Chains

At this stage, Africa's role in the global capital cycle remains that of a net exporter of raw materials and an importer of manufactured goods. Key minerals (copper, cobalt, lithium, nickel), gold, natural gas and oil continue to dominate foreign direct investment. Resource development provides high returns for capital, but it also locks Africa into the low end of the global industrial chain. If the AfCFTA is to change this pattern, it must promote the development of local manufacturing and regional value chains; otherwise, capital will continue to flow along existing resource export pipelines rather than form a new cycle within Africa.

Regional Investment Landscape: Who Dominates? Who Is Marginalized?South Africa holds the largest trade share within SADC. Stronger regional blocs such as SACU and COMESA may dominate the outcomes of AfCFTA rules, while smaller or less influential countries face the risk of being marginalized. Capital naturally flows toward markets with greater scale, better infrastructure, and stronger institutions, which may cause intra-African investment to concentrate further in a few economies such as South Africa, Kenya, and Nigeria, rather than spreading evenly.

Long-Term Trends: When Will Capital Reassess Africa's Investment Value?

Global trade uncertainty (U.S. tariff policies, geopolitical conflicts) has instead highlighted the strategic significance of AfCFTA. But capital will not change direction merely because of an agreement. The real inflection point will emerge when:

• Infrastructure projects begin to create network effects, substantially reducing cross-regional transportation costs;
• More countries fulfill tariff reduction commitments and publish tariff schedules, creating a predictable trade environment;
• Manufacturing and digital services show clear signs of industrial clustering within the region;
• Public finances become less dependent on tariffs, prompting governments to open markets more proactively.

Currently, 19 countries have officially published tariff schedules and 48 countries have ratified the agreement, but implementation is far from complete. Global capital is watching: Is AfCFTA yet another symbolic political project, or a genuine institutional reform that can truly lower cross-border transaction costs and improve investment returns?

The Long-Term Changes Capital Markets Truly Focus On

What capital is assessing is not the provisions of AfCFTA, but whether the African continent is forming the physical and institutional foundation capable of supporting industrial relocation and consumption growth over the next decade. When intra-African trade as a share of total trade remains persistently at the lowest level globally, capital has no reason to prioritize investment in regional supply chains. However, once those governments that took the lead (as Namibia demonstrated in the salt trade) drive more countries to implement reforms, external capital will begin to calculate: on a continent with a young population, accelerating urbanization, and rapidly penetrating digital payments, the returns from regional integration may surpass mere resource extraction.

Does this event mean global capital is reassessing Africa's investment value? Current evidence is still insufficient, but every small act of actual trade is accumulating trust. Over the next five to fifteen years, capital will closely watch whether AfCFTA can transform from agreement text into visible logistics efficiency, customs clearance speed, and investment protection. If these indicators begin to improve, Africa will experience a real shift in the pattern of capital flows; if delays continue, capital will keep taking detours, leaving behind mines, oil pipelines, and ports in Africa, yet unable to carry away the development prospects of the entire continent.