Focus on Africa's domestic market: prospects for European companies
.svg){kind=small}
.svg){kind=small}
When the African Continental Free Trade Area officially began operations in January 2021, it was more than just an economic policy milestone for the African continent - it was a geopolitical signal. With the vision of transforming the fragmented single market of 55 countries into a unified trading area, AfCFTA marked an attempt to overcome colonial fault lines and establish a new economic self-image. For European companies that for years have viewed Africa through the lens of raw materials, development aid or geopolitical marginalization, a strategic repositioning is opening up. Those who fail to act now risk being overtaken by China, Turkey or India.
Africa is on the move, but many European companies remain stuck in 20th century development aid thinking. The facts speak a different language: African domestic trade, which currently stands at a meagre 16% (in comparison: in Europe it is over 60%), is set to increase to over 33% as a result of AfCFTA - a doubling made possible by falling tariffs, harmonized product standards and digital customs reconciliation. According to the African Export-Import Bank (Afreximbank), the AfCFTA could increase the continent's GDP by up to 450 billion US dollars in the medium term and create 18 million new jobs. This is not just a domestic project - it is changing Africa's external negotiating position.
For European companies, this means that those who have so far viewed Africa primarily as a source of raw materials or a cheap sales market are missing out on the opportunity to become part of a new economic narrative. While France's TotalEnergies continues to focus on the fossil fuel sector in Mozambique and Algeria, China's BYD and India's Tata are investing in electromobility and digital infrastructures in Ghana and Nigeria. Europe is hesitating - and losing out.
A look at individual countries shows how new hubs of African value creation are already emerging under AfCFTA. Nigeria, with a population of over 220 million and a rapidly growing digital financial sector, is increasingly becoming a magnet for start-up investments. In 2024, the Nigerian fintech company Flutterwave announced that it was preparing to expand into 15 other African markets - based on regulatory harmonization through AfCFTA.
In South Africa, local companies such as Shoprite and MTN are using the new trade routes to deliver more efficiently to neighboring countries. Kenya, on the other hand, is positioning itself as an East African tech center. The "Silicon Savannah" around Nairobi has not only attracted investors such as Google and Visa, but also benefits from duty-free export companies to the member states - 38% of Kenyan exports went to AfCFTA partner countries in 2023, and the trend is rising.
While the EU in Brussels is touting its Global Gateway Initiative with 150 billion euros for Africa, these promises often fall short of geopolitical rhetoric. In fact, African states are fragmented into bilateral agreements through Economic Partnership Agreements (EPAs), which makes pan-European access to the emerging African single market more difficult. EU trade policy is not only acting asynchronously to the AfCFTA project, it is also undermining it in parts. Instead of relying on multilateral cooperation, asymmetrical structures dominate, leaving little room for co-creation.
German and Swiss companies in particular are called upon to go their own way here. The "Team Europe" approach may make sense politically, but it is often too slow economically. Successful companies are those that enter into locally anchored joint ventures, such as the German company BioNTech, which is setting up an mRNA production facility in Rwanda - an example of technology transfer instead of just opening up the market.
The AfCFTA is a promise - but without physical and digital infrastructure, it remains piecemeal. According to the African Development Bank (AfDB), logistics costs within Africa alone are three times higher than in Southeast Asia. Dilapidated road networks, a lack of customs integration and weak rail infrastructure hinder intra-African trade. A market worth billions is opening up here for European companies, particularly in the fields of logistics, transport technology and digital customs platforms.
One example: Swiss-based logistics company Kuehne+Nagel is currently building a multimodal distribution center in Tanzania with a local partner in order to route goods flows more efficiently via the port of Dar es Salaam to Rwanda and Burundi. Infrastructure is becoming a geopolitical lever - not only to increase efficiency, but also to position the company as a trustworthy partner.
Less visible, but no less dynamic, is the digital boost that AfCFTA is receiving from projects such as the Pan-African Payment and Settlement System (PAPSS). This system enables real-time payments in local currencies across countries for the first time - a game changer for SMEs that were previously hampered by their dependence on the dollar and high transaction costs.
This is a completely new market for European fintechs, digital banks and blockchain companies. Luxembourg and Swiss providers in particular, who specialize in RegTech and compliance, can deliver regulatory complex, cross-border payment solutions. However, this requires a cultural and strategic rethink: not adapting Africa, but co-creating with Africa.
Of course, AfCFTA not only offers opportunities, but also substantial risks. The political instability in countries such as Sudan or Ethiopia, the bureaucracies in Nigeria or the foreign policy tensions in the Sahel show that a single market does not automatically bring stability. There is also a risk that powerful national interests - such as Nigeria's protectionist agricultural policy or South Africa's trade union blockades - will slow down the integration process.
For European companies, this means that risk management is becoming a core competence. Those who are able to navigate complex political landscapes, enter into strategic alliances with locally anchored partners and not just rely on top-down governance deals will reap above-average benefits. Companies such as Siemens or ABB are leading the way - with long-term, locally embedded projects, often together with African universities and development banks.
Perhaps the clearest wake-up call for European companies is the speed with which other geopolitical players are taking advantage of AfCFTA. Chinese exports to Africa rose to 164 billion US dollars in 2023 - a doubling within ten years. China is not only a builder of railroad lines in Kenya or high-voltage power lines in Angola, but also a shareholder in digital platforms, telecommunications infrastructure and industrial parks.
India, on the other hand, has launched a special Africa program for pharmaceutical cooperation in 2024, with production facilities in Nigeria and Senegal. Turkey is pursuing an aggressive foreign trade policy in West Africa, particularly in the construction sector. These countries don't just supply products - they supply narratives, presence and visions.
Europe, on the other hand, often comes across as a hesitant visitor that sees its former supremacy as an entry ticket - while others have long been doing business door to door.
AfCFTA is not a promise of "simpler" business in Africa, but of more complex, but more equal business. European companies that are prepared to see Africa not just as a sales market, but as an innovation partner, are at the beginning of an epochal transformation process. The demographic development - 2.5 billion people by 2050 - coupled with growing urbanization, digitalization and economic integration is turning the continent into a key area for the global economy in the 21st century.
But the window of opportunity for smart positioning is closing. If you ignore the opportunity today, tomorrow you could be a spectator in a game where others have long since set the pace. It is no longer a question of whether European companies should get involved in Africa, but how: with respect, courage, patience - and the ability to share not only profits, but also a common future.
In March 2025, Africa Swiss visited the BWA in Berlin and became an official member - with a focus on economic cooperation between Europe and Africa.
Africa Swiss visited AERO Friedrichshafen in April 2025, focusing on aviation solutions and their potential for Africa.
The AfCFTA is reshaping Africa's internal market - with global implications. Europe's economy has the opportunity to realign itself before others seize it.
Sub-Saharan Africa faces a major energy crisis, with 600 million people lacking electricity-80% of the world's unelectrified population.
