Afreximbank: AfCFTA is a structural force reshaping capital flows in Africa.

Event: Afreximbank Issues Warning on Trade Structure Risks

In 2025, the African Export-Import Bank (Afreximbank), in Volume 10, Issue 1 of its *Trade and Development Finance Brief*, systematically analyzed the structural deficiencies of Africa's trade and investment landscape. The report noted that African exports remain heavily concentrated in raw materials such as agricultural products, oil, gas, and minerals, while imports are dominated by manufactured goods and machinery—a configuration that leaves African economies highly vulnerable to commodity price volatility, geopolitical shocks, and global supply chain disruptions, risks that have intensified significantly since 2022.

Capital Logic: How the AfCFTA Is Transforming Investment Appeal

Afreximbank views the African Continental Free Trade Area (AfCFTA) as a core instrument for addressing the above issues. The Brief predicts that as the AfCFTA's implementation progresses, intra-African exports could grow by more than 20% over the next decade. The logic is that a unified market can integrate fragmented consumer and production spaces, drive industrialization, and strengthen regional value chains, thereby reducing dependence on adverse terms of trade. For cross-border capital, this implies a more predictable tariff environment, greater economies of scale, and lower transaction costs—all key variables determining long-term capital returns.

Funding Sources and Institutional Infrastructure

Although the AfCFTA provides the overarching framework, capital deployment depends on specific institutional infrastructure. Afreximbank plays a dual role here: as both a financier and a platform builder. The Pan-African Payment and Settlement System (PAPSS), spearheaded by the Bank, has been adopted by the African Union as the official payment platform for the AfCFTA, allowing cross-border settlements using local African currencies and bypassing the chain of correspondent banks in U.S. dollars, thereby reducing transaction friction. At the same time, the Bank has established a $10 billion AfCFTA Adjustment Fund, a Border Markets Initiative, and a Collaborative Transit Guarantee Scheme. These institutional arrangements seek to translate the policy intent of the trade agreement into executable transaction flows, bridging Africa's annual trade finance gap of $80 to $120 billion.

Imbalances in Regional Capital Flow Patterns

The Brief reveals significant disparities in FDI inflows: Eastern and Southern Africa attract a far larger share of FDI than Western and Central Africa. Behind this divergence lie differences in infrastructure maturity, political stability, and the degree of industrial agglomeration. The advancement of the AfCFTA could either exacerbate or alleviate this divergence: if corridors and logistics networks are extended westward and centrally, these regions could become new investment destinations; conversely, capital may continue to concentrate in the already advantaged East and South.

Long-Term Trend: Synergy Between Fintech and Trade FinanceThe briefing specifically points out that fintech is driving the growth of domestic investment in Africa. Mobile payments, digital credit, and cross-border settlement platforms are no longer just consumer-level applications but have been incorporated into the industrial policy toolkit—they can lower the threshold for small and medium-sized enterprises to access trade finance, thereby unlocking export potential. The PAPSS system is a representative of this trend: its multilateral governance structure gives it a credibility unmatched by commercial payment networks. Over the next 5 to 15 years, the deep integration of fintech infrastructure with trade finance could become a new magnet for attracting FDI to Africa.

Capital Signals: Reassessing Africa's Investment Value?

This briefing from Afreximbank sends a clear signal: global capital is facing a fundamental transformation of Africa's trade structure. AfCFTA's transition from paper to implementation, along with the establishment of supporting payment, financing, and risk mitigation mechanisms, means that the risk-return ratio for Africa as an investment destination is being recalibrated. Projects and markets that can first integrate into regional value chains, access the PAPSS system, and leverage adjustment funds will receive priority allocation of capital. Does this event mean that global capital is reassessing Africa's investment value? The answer is yes—but only if the institutional infrastructure continues to deliver on its promises.