Training to become familiar with processing letters of credit (L/Cs) and other payment types are amongst the steps local manufacturers and small business owners can take to increase participation in the African Continental Free Trade Area Agreement (AfCFTA) according to the Manufacturers Association of Nigeria (MAN).

Trade in the AfCFTA free trade area commenced on 1 January 2021 and connects 1.3 billion people with a combined GDP valued at US$3.4 trillion among 54 of the 55 African Union nations.

Capacity building

Director general of MAN, Segun Ajayi-Kadir, told Nigeria's Punch news outlet that capacity building in paperwork is needed amongst local manufacturers and small business owners.

"There is the tendency for a failed transaction and ultimately losses when the documentation is faulty; hence, the need for pre-export and post-export documentation," he says.

"Appropriate familiarisation with payment systems like L/Cs, bills for collection, open account and advance payment is also required as there will be a need for sourcing of funds to pay local suppliers and getting payment from the buyer after shipment."

Export diversification

Ajayi-Kadir said for smaller businesses to benefit most from AfCFTA, they need to start accelerating export diversification by targeting products that are largely demanded within the continent but mostly sourced from outside Africa.

Smaller business owners should also develop capacity to understand the AfCFTA rules of origin and trade remedy mechanisms he concluded.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.