A market can open long before the money to serve it arrives. That is the tension East African finance faces today: trading under the African Continental Free Trade Area has formally begun, giving businesses a live continental framework for tariff liberalisation, market access and rules-of-origin implementation, yet the capital that turns a wider market into shipped goods still has to be found, priced and repaid.

The framework is commercial from the first day. Tariff schedules and origin rules are now operating questions, and as tralac’s record that AfCFTA trading commences on 1 January 2021 makes clear, the continent’s blocs become building blocks for cross-border trade. For anyone following the capital, the interesting question is who funds the firms that will use this.

The Balance Sheet: A wider market needs deeper working capital

Continental trade is working-capital hungry. Selling into a market two borders away lengthens the cash-conversion cycle: goods travel further, payment terms stretch, and a firm carries inventory and receivables for longer than a purely domestic seller. A Nairobi or Kigali exporter that wins new African orders may find its growth constrained not by demand but by the financing of that demand.

This is the first-order effect the treaty does not solve on its own. Lower tariffs improve the economics of a sale, but they do not fund the gap between shipping and being paid. The takeaway: the AfCFTA widens the market, but working-capital finance decides how much of it a firm can actually serve.

The Stack: Who provides the capital and who carries the risk

The capital stack behind continental trade has several layers. Commercial banks and trade-finance lines fund the working-capital gap; development finance and institutions such as Afreximbank and the AfDB sit behind cross-border trade, guarantees and settlement; equity investors fund the firms building the routes. Each layer carries a different slice of risk — currency, counterparty, delivery.

For East African firms, the practical worry is access rather than existence. Trade finance on the continent is concentrated, and smaller firms often sit outside it, priced out by collateral demands and thin credit histories. The takeaway: the treaty opens the market to all, but the capital stack still favours the firms already inside it.

The Risk: Currency, settlement and repayment across borders

The risks beneath continental trade are specific. Selling across borders means invoicing across currencies, and East African exporters carry exchange-rate exposure between the shilling, franc and the US dollar in which much regional trade is priced. Settlement adds a second risk: moving money across African banking systems remains slow and costly, which lengthens the repayment cycle and raises the cost of capital.

These are not reasons to stand aside; they are the terms on which the opportunity must be underwritten. A lender or investor who prices currency and settlement risk honestly can back continental trade; one who ignores them will be surprised. The takeaway: the return on AfCFTA trade lives or dies on how well currency and settlement risk are allocated.

The Decision: What an investor underwrites from here

The useful response for capital providers is to look past the headline market size to the financing structure beneath a given trade. The questions are concrete: how is the working-capital gap funded, who carries the currency risk, and can a smaller East African firm enter the stack at all, or is it locked out by collateral it cannot post.

The indicator worth tracking is the availability and cost of trade finance for mid-sized East African exporters — not the tariff schedule, which is now fixed, but the price of the money that makes the schedule usable. If trade finance deepens and its cost falls as intra-African orders rise, the treaty is being capitalised. If the market widens while finance stays scarce, the opportunity will accrue to those who already hold the balance sheet. From today, that is the capital question worth watching.