PACCI UPDATESADDRESSING
PACCI UPDATESADDRESSING THE SHORTCOMINGS OFTHE AFCFTA COMPETITION POLICYA briefing document from the Pan African Chamber of Commerce and Industry, PACCI. Authors: Aminou Akadiri,Executive Director, Federation of West African Chamber of Commerce and Industry (FWACCI), and Wincate M Muthini,Senior Programme Manager at PACCI.benefits of the AfCFTA. The policy does not provide enough safeguards to ensurethat these marginalised groups are integrated into the new trade landscape, whichcould result in widening regional and social inequalities.The competition policy lacks a clear focus on inclusive growth whichwould include women-led, youth-led and rural enterprises.The African Continental Free Trade Area (AfCFTA) competition policy is asignificant step towards fostering economic integration and creating a unifiedmarket across Africa. It holds the potential to break down trade barriers, promotefair competition and unlock new opportunities for businesses. However, the policy inits current form risks falling short of addressing the deeper structural, economic andsocial challenges facing the continent. Without a more inclusive and comprehensiveapproach, the policy could inadvertently exacerbate existing inequalities, marginalisevulnerable industries and limit the long-term benefits of the AfCFTA.One of the major shortcomings of the competition policy is its insufficientconsideration of the structural inequalities that exist between large corporationsand smaller enterprises, particularly micro, small and medium-sized enterprises(MSMEs). Larger businesses, with better access to capital, technology and markets,are likely to dominate the AfCFTA landscape, crowding out smaller competitors.MSMEs, which form the backbone of many African economies, may struggle tosurvive in this new competitive environment without tailored support.This would deepen the economic divide, leaving MSMEs unable to fully capitaliseon the opportunities created by the AfCFTA.Moreover, the competition policy lacks a clear focus on inclusive growth. Womenled,youth-led and rural enterprises — segments that already face barriers to marketentry and access to finance — are particularly at risk of being excluded from theKey shortcomingsThe current policy framework does not provide sufficient mechanisms for MSMEsto seek redress when faced with unfair practices, which discourages competitionand undermines market fairness. Finally, the policy’s failure to address the informalsector is a significant oversight. The informal economy accounts for a large portionof economic activity in many African countries, yet it remains largely excluded fromthe formal AfCFTA framework. Without strategies to integrate informal businessesinto the formal market, a significant share of the continent’s economic potential willremain untapped.Additionally, the policy fails to offer adequate protection to vulnerable industriessuch as agriculture and small-scale manufacturing. These sectors, which are vital tolocal economies in many African countries, could be overwhelmed by larger, morecompetitive firms, leading to job losses and economic instability in regions thatrely heavily on these industries. Another critical shortcoming is the limited accessto dispute resolution mechanisms for MSMEs. Smaller businesses often lack theresources to navigate complex legal frameworks, leaving them vulnerable to anticompetitivepractices by larger firms.To address these challenges, more radical solutions are needed. First, the AfCFTAcompetition policy must introduce a series of structural reforms aimed specifically atlevelling the playing field for MSMEs. This could include the creation of an AfricanMSME Development Fund, supported by the AfCFTA Secretariat and memberstates, to provide direct financial support, technical assistance and market accessprogrammes for small businesses.This fund should prioritise businesses in disadvantaged regions and sectors,ensuring that they are not left behind in the race for growth. Additionally, memberstates should adopt a more interventionist approach, introducing temporary marketprotections for vulnerable sectors such as agriculture and small-scale manufacturing.These industries should be given time to adjust to the competitive pressures of theAfCFTA, with targeted subsidies and investment programs designed to enhanceproductivity and resilience.Proposed solutionsTo promote inclusive growth, the AfCFTA competition policy should mandate theinclusion of women-led, youth-led and rural enterprises in all trade-access andmarket-access initiatives. This could be achieved through binding quotas that require10PHOTO: African Risk Capacity Group
PACCI UPDATESlarge corporations to source a certain percentage of their inputs from businessesowned by these groups.Further, a continent-wide programme could be established to train and empowerwomen and youth entrepreneurs, equipping them with the skills, resources andnetworks needed to thrive in the AfCFTA market. This approach would ensure thateconomic opportunities are distributed more equitably, helping to reduce social andregional disparities.A more aggressive approach to dispute resolution is also necessary. The AfCFTAcompetition policy should establish a dedicated MSME dispute resolution body,offering a streamlined and accessible platform for small businesses to report anticompetitivepractices. This body could operate with a fast-track process, offeringaffordable legal assistance and mediation services to ensure that MSMEs cancompete on fair terms. Additionally, penalties for anti-competitive behaviour by largecorporations should be significantly increased, with a portion of the fines directed tothe MSME Development Fund to further support smaller businesses.Finally, the AfCFTA must take bold steps to formalise and integrate the informaleconomy. This could involve a comprehensive programme of tax incentives,simplified business registration processes and the introduction of digital platformsthat make it easier for informal businesses to transition into the formal market.Governments, in partnership with the AfCFTA Secretariat, could also establishinnovation hubs and co-operatives to help informal businesses grow and connectto formal value chains. These measures would not only increase the inclusivity ofthe AfCFTA but also unlock significant economic potential that is currently lyingdormant in the informal sector.In conclusion, while the AfCFTA competition policy marks a critical milestone inAfrica’s journey towards economic integration, it needs to be strengthened to addressthe continent’s deeper structural and social challenges.By adopting more radical and inclusive solutions – ranging from direct supportfor MSMEs and marginalised groups to sectoral protections and informal economyintegration – the AfCFTA can truly become a driver of sustainable and equitablegrowth. This will ensure that the benefits of Africa’s unified market are shared widely,fostering a prosperous and resilient future for all.Smaller businesses often lack the resources to navigate complex legal frameworks.Aminou Akadiri, Executive Director, Federation of West African Chamber of Commerce and Industry.PACCI contact detailsGulf Aziz Building 4th Floor 402, Bole, Addis Ababa, EthiopiaTel: +251 11 691 0011Email: info@pacci.orgWebsite: www.pacci.orgSocial media: @officialpacciWincate Muthini, Senior Programme Manager, PACCI.PHOTO: Rodnae Productions on Pexels11
