Intra-African trade has expanded significantly in recent years, supported by resilient financial institutions and increased regional integration efforts, but persistent trade finance shortages continue to constrain growth, according to a new report by the African Development Bank (AfDB).
The findings are contained in the fifth edition of the AfDB’s Trade Finance Report, released during the bank’s annual meetings in Brazzaville, Republic of Congo.
Covering developments between 2020 and 2024, the report examines how African banks and development finance institutions responded to a challenging global environment marked by economic uncertainty, geopolitical tensions and lingering post-pandemic disruptions.
According to the report, intra-African trade accounted for 34 percent of all bank-financed trade on the continent during the period, representing an 89 percent increase compared with the 2011–2019 period.
The increase reflects the gradual strengthening of regional trade links, aided by efforts to deepen economic integration and expand commerce among African countries.
More Read
The report also highlights the growing role of commercial banks and development finance institutions in sustaining trade flows despite financing constraints and foreign exchange shortages.
Presenting the report, Anthony Simpasa said unmet demand for trade finance had fallen by nearly 10 percent between 2019 and 2024 due to coordinated interventions by multilateral development banks, governments and international partners.
However, he warned that emerging global risks could threaten recent progress.
More Read
“The resurgence of tensions and the reduced risk appetite of correspondent banks could wipe out the progress made,” Simpasa said.
Under a downside scenario, the continent’s trade finance gap could widen to between $86.6 billion and $102.6 billion by 2027, according to the report.
The financing shortfall remains a major obstacle to trade expansion. In 2024, Africa’s trade finance gap was estimated at between $74 billion and $92 billion, equivalent to about 5.4% of the continent’s total merchandise trade.
The report notes that commercial banks financed only 23 percent of African trade on average during the 2020–2024 period, down from 40 percent during 2011–2019, indicating a decline in banking sector participation in trade finance.
Foreign exchange shortages remain one of the most significant constraints facing lenders and businesses.
Around 36 percent of surveyed banks identified access to foreign currency as the principal barrier to providing trade finance, compared with 18 percent during the 2015–2019 period.
More Read
The report also points to slow adoption of digital technologies within the sector, with only 28% of banks reporting active use of digital trade finance tools.
Participants at the report launch argued that innovation and institutional reforms will be essential to closing the financing gap.
Admassu Tadesse highlighted the potential of digitalisation, guarantee mechanisms and new financing structures to broaden access to trade finance across the continent.
He also called for greater support for the New African Financial Architecture for Development (NAFAD), which aims to strengthen Africa’s financial systems and mobilise long-term capital.
Similarly, Didier Acouetey, senior adviser to the AfDB president on private sector development, said NAFAD could help address financing constraints faced by African small and medium-sized enterprises (SMEs).
Representatives from the African Union Commission stressed the need to support the so-called “missing middle” of SMEs, which often struggle to secure adequate financing despite their central role in economic activity and job creation.
The report estimates that development finance institutions facilitated an average of US$32 billion in trade finance annually between 2020 and 2024, equivalent to around 3 percent of Africa’s merchandise trade.
While the growth in intra-African trade is viewed as a positive sign for regional integration, the AfDB said addressing structural financing constraints remains critical if the continent is to fully realise the benefits of the African Continental Free Trade Area and achieve stronger long-term economic growth.
The findings underscore the importance of expanding access to trade finance, accelerating digital transformation and strengthening financial institutions to support Africa’s growing trade ambitions.
