Mercosur Ignores Africa Trade Pact as South Africa Cements AfCFTA Edge
Latin American governments and businesses are neglecting a 2016 trade deal with Southern Africa just as the continent’s 1.4-billion-person single market takes shape, handing a structural advantage to South African manufacturers.
The African Continental Free Trade Area (AfCFTA) is moving beyond diplomatic posturing into the technical work of tariff reductions and customs harmonisation. Yet as this single market of 1.4 billion people takes shape, a preferential trade agreement between Mercosur and the Southern African Customs Union (SACU) that entered into force in 2016 remains virtually ignored.
For investors and executives in São Paulo or Buenos Aires, this neglect carries a tangible cost. South Africa is leveraging its position as the continent’s most diversified economy to export vehicles, machinery and processed foods across Africa. Trade data shows South Africa’s intra-continental exports are well-diversified, with Namibia accounting for roughly 13% and Botswana, Nigeria and Mozambique each taking 12%. Under AfCFTA preferences, these value-added exports will increasingly displace Latin American goods.
The 2016 pact with SACU provides legal tariff reductions linking Brazil, Argentina, Paraguay and Uruguay to South Africa, Botswana, Namibia, Eswatini and Lesotho. However, Latin American firms have failed to build the logistics networks and trade finance structures needed to move actual cargo. While trade ministries obsess over EU-Mercosur negotiations, Latin America barely registers among South Africa’s top trading partners, which are dominated by China, the US, Germany, Japan, India and the UK.
East Africa presents the clearest test
The subregion’s economy is projected to grow 5.8% in 2026, supported by a combined GDP of roughly $511 billion and a population exceeding 300 million. Kenya expects 5.3% growth in 2025, Ethiopia is tracking 7% to 8%, and Tanzania is forecast at 6%. This expansion is driving acute demand for commercial transport, agricultural machinery and construction equipment—sectors where Brazilian and Mexican companies possess world-class capabilities.
Asian and European competitors already dominate these markets through established distribution networks and local brand presence. Latin American exporters face long ocean transit times and port costs, but these are logistical problems rather than structural barriers. Establishing regional distribution hubs in ports like Dar es Salaam or Nairobi is essential to capturing market share before South African manufacturers, fortified by AfCFTA, close the window entirely.
