Public–private partnerships (PPPs) and streamlined cross-border transaction processes, along with other key initiatives, can further allow for trade under the African Continental Free Trade Area (AfCFTA) and facilitate growth in key sectors, says financial institution Standard Bank Group business and commercial banking trade group head Philip Myburgh.

He highlights several key sectors with significant potential for private investment under AfCFTA. These include manufacturing, which is expected to grow as Africa increases local production, along with agriculture and agroprocessing, which offer opportunities to add value to agricultural products, improve food security and generate employment.

Renewable energy also offers opportunities, particularly solar, wind and hydroelectric projects, which align with the Sustainable Development Goals.

Additionally, infrastructure development, especially in transport, logistics and digital networks, is also regarded as critical, as it facilitates trade by lowering costs and enhancing efficiency, thus enabling businesses to operate more effectively across borders.

PPPs play a pivotal role in reducing regulatory barriers and facilitating trade under the AfCFTA. PPPs can be leveraged to attract foreign direct investment and development assistance, as they help to de-risk investments by pooling resources and expertise from the public and private sectors, adds Myburgh.

By combining public oversight with private-sector capital, innovation and expertise, PPPs can address key infrastructure deficits in areas such as transport, energy and digital connectivity.

They can also foster collaboration between the public and private sectors to streamline regulatory processes; these include simplifying customs processes, reducing bureaucratic inefficiencies and enhancing transparency.

Further, PPPs can contribute to capacity building through training programmes aimed at improving compliance with AfCFTA regulations among public officials and privately owned businesses.

The private sector’s contribution to innovation and technology, including digital platforms for trade documentation and payment systems, can enhance trade facilitation by reducing delays and costs associated with cross-border transactions.

However, to increase financial sector participation in intra-African trade, several policy and regulatory adjustments are required.

Harmonising trade regulations across the continent would reduce complexity and make cross-border transactions easier, while promoting financial inclusion through expanded access to banking and digital payment services will empower more businesses to engage in trade.

Additionally, the adoption of digital trade protocols, such as electronic documentation, digital signatures and online dispute resolution, will significantly streamline cross-border trade processes.

Myburgh adds that, to further de-risk investments and encourage financial institutions to support AfCFTA-driven trade expansion, parties should prioritise risk participation agreements (RPAs) and the implementation of the Pan-African Payment and Settlement System (PAPSS).

RPAs help mitigate risks by sharing them among multiple parties, while the PAPSS could facilitate faster and more secure transactions across borders.

Myburgh adds that Standard Bank offers robust digital payment solutions to address unreliable cross-border payments, including borderless banking in East Africa, and has collaborated with  Ghana and Nigeria to implement and operationalise the PAPSS.

Government Role
AfCFTA-aligned governments play a crucial role in enhancing access to affordable credit and mitigating trade risks for businesses operating within the AfCFTA.

To improve credit access, governments can partner with development banks, such as the African Development Bank and African Export–Import Bank, to offer low-cost trade-finance solutions.

Governments must also establish a supportive environment through policy frameworks,  including regulations that lower interest rates and loan guarantees for businesses engaged in intra-African trade.

By investing in capacity-building initiatives, governments can help educate businesses on financial management and credit use, which will assist businesses in becoming more creditworthy and better equipped to effectively manage loans.

Governments can also promote the use of trade credit insurance to protect businesses against non-payment and political risks such as currency inconvertibility, political violence and the expropriation of assets. This will assist in making it safer for businesses to engage in cross-border trade.

Standard Bank’s Role
Businesses operating in Africa face several barriers to trade, with access to capital being one of the most pressing challenges. Standard Bank addresses this through a range of working capital and long-term funding solutions.

Standard Bank also leverages its extensive presence across the continent to connect clients with potential partners and opportunities, which assists in accessing new markets and supply chains, as businesses often struggle to search for suppliers or clients in other countries.

Further, to support informed business decisions, the bank developed the ‘Standard Bank Africa Trade Barometer’, a yearly report that combines data from trusted sources with “on-the-ground insights” gathered from over 2 000 businesses across ten of Africa’s most dynamic markets. These markets represent 66% of the continent’s GDP and 45% of its population.

Recognising the critical role of working capital and trade finance in facilitating trade across the continent, and in response to the continent’s estimated $81-billion yearly trade finance gap, Myburgh says the bank has significantly expanded its offerings.

“In some markets, we have doubled our exposure to small and medium-sized enterprises (SME), while in countries such as Angola we have become the first bank to offer SMEs crucial solutions like invoice discounting,” he concludes.