The African Continental Free Trade Area (AfCFTA) Secretariat has disclosed that Africa loses approximately $5 billion every year through foreign exchange transactions — a staggering figure that continues to raise the cost of doing business and weaken the continent’s economic competitiveness.
The revelation was made by Dr. Tsotetsi Makong, Director for Coordination and Programmes at the AfCFTA Secretariat, during the 2nd International Conference on Environment, Social, Governance (ESG) and Sustainable Development of Africa (ICESDA 2025) held in Accra. He explained that the current system of cross-border trade, which depends heavily on foreign currencies like the US dollar, the euro, and the pound sterling, drains billions from African economies that could otherwise be reinvested to accelerate continental growth.
According to Dr. Makong, these financial leakages have become a significant obstacle to Africa’s integration agenda and the full realization of the AfCFTA’s vision of a single, unified market. He added that similar challenges are emerging in digital payment systems, where fragmented regulatory structures and limited interoperability are inflating transaction costs and slowing down progress toward financial inclusion.
“Africa is losing about $5 billion annually just through foreign exchange conversions. Every time we move money across our borders, we lose value to non-African intermediaries. This is one of the hidden costs that makes doing business in Africa unnecessarily expensive,” Dr. Makong stated.
He noted that the AfCFTA Secretariat is actively developing frameworks and mechanisms to address the inefficiencies in cross-border payments, especially by promoting local currency settlements and encouraging the use of the Pan-African Payment and Settlement System (PAPSS), which is designed to facilitate instant, secure, and cost-effective intra-African trade transactions.
The Need for Continental Collaboration
Dr. Makong emphasized that the only way for African nations to overcome these economic challenges is through deeper regional and continental collaboration. He underscored the need for countries to pool their financial, industrial, and technological resources to attract large-scale investments and drive inclusive development.
“We’ve been fragmented, and these artificial borders have been created. Nobody is going to invest in Ghana because Ghana alone is too small to attract huge investment. But if you put Nigeria, Togo, and other countries together to create one single market — which is exactly what we’re doing under AfCFTA — you expand the investment potential of the continent,” he said.
He further argued that the fragmentation of African economies has limited their ability to compete globally. Despite national development plans such as Vision 2020 or Vision 2030, many African markets remain too small and undercapitalized to justify the scale of investment needed for industrial transformation.
“Individually, no single African country can advance. It doesn’t matter what we have in our national plans; our markets are simply too small to attract the level of investment we need. For the sustainable growth we desire, we must act as one bloc — pooling resources, harmonizing regulations, and leveraging our collective strength,” he added.
The AfCFTA’s Vision for a Unified Market
The African Continental Free Trade Area, launched in 2018 and operationalized in 2021, aims to create the world’s largest single market, connecting 1.4 billion people across 55 countries with a combined GDP of over $3.4 trillion. The agreement seeks to remove trade barriers, harmonize standards, and promote the free movement of goods, services, and people across Africa.
Central to this vision is the development of financial and digital infrastructure that reduces dependency on foreign systems and strengthens intra-African trade. The AfCFTA Secretariat has been working closely with institutions such as the African Export-Import Bank (Afreximbank) and the African Union Commission to roll out the Pan-African Payment and Settlement System (PAPSS).
The system allows traders and businesses in different African countries to conduct cross-border transactions in their local currencies, eliminating the need for costly currency conversions through non-African banks. This initiative, according to Dr. Makong, could recover billions in annual losses and reinvest that value into African economies.
Building Economic Resilience
Dr. Makong also highlighted that addressing the issue of foreign exchange losses aligns with the broader goal of building economic resilience and financial independence across the continent. He stressed that Africa must prioritize developing strong financial institutions, innovative payment systems, and intra-African value chains that keep wealth circulating within the continent.
He pointed out that the continent’s dependence on foreign financial systems undermines its economic sovereignty and exposes it to global market shocks. By embracing continental financial integration, Africa can strengthen its bargaining power in international trade and shield its economies from external vulnerabilities.
“Africa’s economic destiny lies in its own hands. We must trade more among ourselves, settle payments in our currencies, and ensure that the value generated within Africa stays in Africa,” he said.
Sustainable Development Through Integration
The 2nd ICESDA Conference brought together policymakers, development experts, and private sector leaders from across Africa to discuss strategies for aligning environmental sustainability, social inclusion, and governance reforms with the AfCFTA agenda.
Participants at the conference agreed that regional integration is key to achieving sustainable development goals (SDGs) and that harmonizing policies on trade, environment, and finance would enable African countries to maximize their economic potential while safeguarding social and environmental well-being.
Dr. Makong concluded by urging African leaders to translate policy discussions into action, emphasizing that the success of the AfCFTA will depend on the political will of member states and the collective commitment to continental progress.
“The AfCFTA is not just about trade; it’s about transforming the economic destiny of Africa. It’s about building an Africa that produces, trades, and prospers on its own terms. But for that to happen, we must act as one people, one market, and one future,” he said.
As Africa continues its journey toward deeper integration, the AfCFTA’s call to close the $5 billion annual foreign exchange gap stands as a powerful reminder of the urgent need for financial unity and innovation.
— Africa Live News
