OPINION: Why AfCFTA’s biggest challenge begins after Ratification
Author: Olubukola Miriam Agemo
Almost every foreign investor I speak with eventually asks the same question: Do you think AfCFTA would actually work?
It is a fair question but it is often aimed at the wrong target.
The Legal Problem Is Mostly Solved
By most measures, the legal architecture of the African Continental Free Trade Area (AfCFTA) is now largely in place. As of mid-2026, 49 of the 54 signatories have ratified the Agreement, 48 countries have submitted tariff offers, and rules of origin have been agreed for the vast majority of product lines. Whatever skepticism remains about AfCFTA is no longer about whether a workable legal framework exists. It does.
Which raises the more important question: if the legal framework is largely built, why does implementation continue to lag behind ratification, sector by sector and country by country?
The Political Economy Problem
The answer that receives the least attention in these conversations is not legal, tariff-related, or logistical. It is the political economy of industrialization and the automotive sector illustrates it particularly well.
The economics of regional integration make it likely that vehicle manufacturing will concentrate in a relatively small number of existing industrial hubs. Manufacturing scale, supplier depth, logistics, and export infrastructure reinforce one another over time, creating cumulative advantages that are difficult for late entrants to overcome.
Under this “hub-and-spoke” model, final vehicle assembly is concentrated in a handful of manufacturing centres, while surrounding economies specialize in supplying components, raw materials, or intermediate inputs, often capturing a much smaller share of the value created. Governments that are unlikely to become manufacturing hubs under this pattern have correspondingly weaker incentives to accelerate implementation of an agreement that may formalize their competitive disadvantage rather than reduce it.
Morocco and South Africa already dominate Africa’s automotive industry. Morocco has spent decades building an export-oriented automotive ecosystem around major investments such as Renault-Nissan’s Tangier complex and Stellantis’s Kenitra facility, supported by consistent industrial policy, supplier development, and increasing local content. South Africa, meanwhile, remains the continent’s largest and most sophisticated automotive manufacturing base. Many smaller African economies, by contrast, remain only marginally integrated into continental automotive value chains despite their proximity to these hubs, and continue to face significant barriers to attracting the investment needed to move into higher-value manufacturing.
This asymmetry explains something that ratification statistics alone cannot: why countries with the least to gain from today’s industrial geography are often the slowest to move from legal commitment to operational liberalization.
When a government reduces tariffs on imported vehicles, it is not simply making a trade policy decision. It is making a long-term industrial policy choice. If domestic firms lack reliable infrastructure, supplier networks, skilled labour, financing, and logistics capabilities, liberalization can appear less like an opportunity and more like the formal acceptance of long-term dependence on manufacturing hubs elsewhere on the continent. Infrastructure gaps transform what might otherwise be a temporary adjustment challenge into a lasting structural disadvantage.
For investors, this distinction matters. Implementation risk is increasingly shaped less by treaty negotiations than by national industrial strategies. Countries investing in supplier development, logistics, energy reliability, industrial financing, and manufacturing capability are far more likely to capture AfCFTA’s long-term gains than those relying solely on tariff liberalization.
Why This Logic Isn’t Unique to Africa
This pattern is not unique to AfCFTA. It is, in many respects, the historical pattern of regional economic integration.
Under NAFTA, Mexico’s automotive industry expanded dramatically after 1994, but production concentrated in a relatively small number of industrial clusters rather than dispersing evenly across the country. Within the European Union, automotive manufacturing remains centred on Germany and has diffused primarily into Central and Eastern European economies such as Czechia, Slovakia, Poland, and Hungary that deliberately built the supplier capabilities and investment environment necessary to integrate into German-led value chains. ASEAN followed a similar trajectory, with Thailand emerging as the region’s principal automotive hub while countries such as Vietnam and Indonesia continue to expand their manufacturing capabilities.
Industrial concentration, therefore, is not evidence that regional integration has failed. It is often the first stage of successful industrialization.
What determines long-term success is whether today’s manufacturing hubs become permanent monopolies over regional value chains or whether deliberate industrial policy enables production networks to spread over time.
The emergence of industrial hubs is rarely accidental. It reflects sustained public investment, targeted industrial policy, institutional coordination, and long-term commitments to supplier development just as much as it reflects market forces. If today’s hubs were built through deliberate policy choices, tomorrow’s hubs can be as well.
What Would Actually Break the Cycle
The interaction between industrial concentration, unequal incentives, and uneven implementation creates a self-reinforcing cycle that no further legal refinement can resolve on its own.
Breaking that cycle requires coordinated action across several fronts.
Financing. Instruments such as the Afreximbank Automotive Fund are designed to channel capital into local content development beyond today’s manufacturing hubs. These are precisely the kinds of interventions that market forces alone are unlikely to provide.
Supplier development. Technology transfer, supplier-upgrading programmes, skills development, and support for small and medium-sized manufacturers can enable countries to move beyond supplying raw materials and low-value components toward more sophisticated manufacturing activities.
Infrastructure and industrial coordination. Reliable ports, rail networks, power systems, logistics corridors, and digital infrastructure determine whether tariff liberalization translates into genuine competitiveness. Equally important are coordinated regional industrial strategies, common standards, cross-border industrial clusters, and deliberate value-chain planning that allows smaller economies to integrate into regional production networks rather than compete against established hubs in isolation.
Beyond Ratification
None of this suggests that AfCFTA is failing.
Rather, it suggests that the Agreement has largely accomplished what a trade treaty can achieve: establishing the legal foundations for a continental market. It is now confronting a far more difficult challenge, building the productive capabilities that allow countries to compete within that market while convincing governments that are not currently positioned to benefit under today’s industrial geography that the long-term gains from integration remain worth pursuing.
That is not primarily a legal challenge. It is a political and developmental one.
It will not be resolved on the ratification timeline. It will be resolved, if it is resolved at all on the timeline of industrial investment, institutional learning, and structural transformation, measured in decades rather than fiscal years.
The first phase of AfCFTA has been about removing barriers to trade.
The second phase must be about removing barriers to production.
Trade agreements integrate markets.
Industrial policy integrates production.
AfCFTA has made remarkable progress on the first task. Whether it succeeds in the second will determine the geography of African manufacturing for decades to come.
For investors, policymakers, and development institutions alike, the more important question is no longer whether AfCFTA will work in principle. It is which countries are investing today in the infrastructure, institutions, supplier capabilities, and industrial strategies that will allow them to become tomorrow’s manufacturing hubs rather than remain permanent participants on the margins of continental value chains.
That, not the text of the Agreement is where the next chapter of African economic integration will be written.
This article was originally published on Linkedin and is republished with permission.
