Mozambique African Continental Free Trade Area - AfCFTA

The African Continental Free Trade Area (AfCFTA) and Its Benefits for Mozambique

The African Continental Free Trade Area (AfCFTA), launched in January 2021, represents a landmark initiative aimed at creating a single market for goods and services across 54 African countries. With a collective population of 1.4 billion and a combined GDP of $3.4 trillion, AfCFTA offers significant opportunities for economic growth and integration. Mozambique, having ratified the agreement in January 2023, stands poised to reap substantial benefits from this transformative trade framework. This article examines AfCFTA's structure, Mozambique's engagement with the agreement, and the specific economic benefits it is likely to yield, alongside the challenges that must be addressed for successful implementation.

Understanding AfCFTA

The AfCFTA, established under the auspices of the African Union (AU), has several core objectives. First, it aims to eliminate tariffs on 97% of intra-African trade, with an immediate reduction of tariffs on 90% of goods, while the remainder will be phased out over 5 to 10 years for sensitive products. Second, the agreement seeks to reduce non-tariff barriers by harmonizing customs procedures and regulations, which can streamline trade processes across the continent. Furthermore, AfCFTA aims to promote industrialization and encourage value-added production through regional value chains.

Recognizing the importance of enhancing intra-African trade—currently only 15% of total African trade—the AfCFTA is projected to increase this figure to 52% by 2030. To achieve these ambitious goals, the agreement encompasses trade in goods, services, investment, intellectual property, and competition policy, with protocols on digital trade and the inclusion of women and youth in trade development added in 2023. The AfCFTA Secretariat, based in Accra, Ghana, oversees the implementation of the agreement, supported by various member states and international partners.

Mozambique's Engagement with AfCFTA

Mozambique's ratification of AfCFTA in early 2023 aligns with its long-term commitment to regional integration and economic development. The country already participates in trade agreements through the Southern African Development Community (SADC) Free Trade Area, which lays the foundation for its engagement with the continental agreement.

The first official AfCFTA shipment from Mozambique to Kenya in April 2025 marked a significant milestone for the country and its small and medium enterprises (SMEs), demonstrating its readiness to tap into continental markets. Additionally, Mozambique's Pacote de Medidas de Aceleração Económica (PAE, 2022) aims to streamline business regulations and promote export-oriented growth. This aligns well with AfCFTA's objectives of enhancing trade and economic integration.

Benefits for Mozambique

1. Expanded Market Access

One of the most significant benefits for Mozambique under the AfCFTA is the expanded access to new markets. In 2023, the country's exports totaled $8.27 billion, heavily reliant on natural resources such as coal (72% of exports) and agricultural products (3.36%). With the AfCFTA in place, Mozambique gains entry to a market of 1.4 billion consumers, which significantly boosts demand for its goods. The elimination of tariffs on 90% of products will enhance the competitiveness of Mozambican exports, allowing for easier access to regions that were previously restricted by high tariffs. For instance, sugar exports to Kenya and cotton exports to Nigeria are now more viable with reduced tariff barriers.

2. Economic Diversification

Mozambique has historically relied on extractive industries for economic stability, with mineral resources constituting a significant portion of its export profile. However, the AfCFTA opens pathways for economic diversification. By promoting value-added production through regional value chains, Mozambique can enhance its agricultural sector by processing raw materials into finished products. This includes the possibility of turning cotton into textiles for markets, like Ethiopia, or processing cashews for packaging and export.

Such diversification could increase the share of manufacturing in GDP from 10% to 15% by 2030, creating over 100,000 new jobs in the process. Initiatives like ProSAVANA aim to integrate farmers into agribusiness, which could attract substantial investments targeting rural agricultural communities.

3. Enhanced Regional Integration and Trade Efficiency

Mozambique's well-established ports serve as essential conduits for its landlocked neighbors. About 30% of the country's cargo comprises transit goods for countries like Malawi and Zambia. The AfCFTA's customs harmonization and adherence to Rules of Origin will help streamline trade processes, significantly reducing border delays and enhancing efficiency.

Recent investments, including the World Bank's $500 million commitment for trade corridor improvements, align with these goals. Further examples of success include the reduction in transit times for goods entering Malawi through Nacala Port, which improved by nearly 50% following the establishment of the AfCFTA framework.

4. Empowerment of SMEs and Marginalized Groups

SMEs play a significant role in Mozambique's economy, employing approximately 80% of the urban workforce. However, only a small percentage engage in export activities due to barriers in access to international markets. The AfCFTA's initiatives, particularly its focus on empowering women and youth through trade, seek to enhance opportunities for these groups.

Training programs and digital trade platforms, such as AfCFTA's e-Tariff Book, enable SMEs to reach broader continental markets. The inaugural AfCFTA shipment that involved women-led SMEs exporting goods to Kenya is a prime example of how the agreement can foster inclusive growth.

5. Attracting Investment

Mozambique has attracted significant foreign direct investment (FDI) in recent years, thanks to a burgeoning natural resources sector. The AfCFTA's investment protocols serve to further encourage intra-African FDI, with established companies eyeing Mozambique's potential in energy production and agriculture.

The combination of stable trade rules and ongoing investments positions Mozambique as an attractive destination for foreign capital, which can provide crucial resources for development and infrastructure projects.

Challenges and Recent Developments

Despite its many advantages, the implementation of the AfCFTA presents challenges for Mozambique. Non-tariff barriers such as slow customs clearance and high port charges hinder trade efficiency. Additionally, only 19% of Mozambique's road network is paved, and recurring floods impact around 1,000 kilometers of roads each year.

The security situation in Cabo Delgado poses another substantial threat, as the insurgency has resulted in significant trade losses and disrupted LNG projects. Addressing corruption and bureaucratic inefficiencies is also critical for maximizing the AfCFTA's benefits.

However, recent developments signal progress. Mozambique's first SME shipment to Kenya in 2025 marked a promising start under the AfCFTA framework, while the 2023 memoranda with SADC aim to synergize corridor investments with the AfCFTA's objectives. Capacity-building initiatives, including training for SMEs and policy reforms to streamline business processes, reflect concerted efforts to enhance Mozambique's participation in this ambitious continental trade initiative.

Conclusion

The African Continental Free Trade Area offers Mozambique a transformative opportunity to leverage its strategic coastal position, abundant natural resources, and strong agricultural base for robust economic growth. By broadening market access, promoting diversification, enhancing trade efficiency, empowering SMEs, and attracting foreign investment, the AfCFTA stands to significantly impact Mozambique's economic landscape.

While there are notable challenges that need to be addressed, Mozambique's commitment to continuous reforms and development, coupled with the support from AfCFTA and SADC, places the country on a path toward becoming a vital trade hub in Southern Africa. With focused efforts, Mozambique can harness the benefits of AfCFTA to drive sustainable, inclusive growth and elevate its position on the continental and global stages.