Africa’s trade finance gap has narrowed in the aftermath of the Covid-19 pandemic, though structural challenges continue to limit access to funding for cross-border trade, the African Development Bank (AfDB) has said.
In its latest Trade Finance Report, the AfDB estimated that unmet demand for trade finance across the continent stood between 74 billion and US$92 billion in 2024, representing about 5.4 percent of Africa’s total merchandise trade.
The bank said the improvement reflects stronger support from development finance institutions, governments, export credit agencies and global commercial banks, which helped sustain trade flows during a period of global economic disruption.
Without these interventions, the AfDB warned that Africa’s annual trade finance gap could have exceeded US$100 billion between 2020 and 2024.
Despite the progress, commercial banks continue to play a limited role in financing African trade, intermediating an average of just 23 percent of total trade during the period under review, down from 40 percent between 2011 and 2019.
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The report noted, however, that intra-African trade financing has improved, accounting for 34 percent of bank-intermediated trade between 2020 and 2024, reflecting gradual progress in regional financial integration.
Foreign exchange shortages were identified as the most significant constraint on trade finance expansion, with 36 percent of surveyed banks citing limited forex liquidity as their primary challenge.
The AfDB also highlighted slow adoption of digital trade finance systems, with only 28 percent of banks using such platforms due to high implementation costs and weak technological infrastructure.
While uptake remains limited, banks reported that digital solutions improve efficiency by speeding up processing times, enhancing transparency, reducing costs and strengthening transaction security.
Development finance institutions played a critical stabilising role, providing an estimated 32 billion dollars annually in trade finance over the 2020–2024 period, helping to bridge financing gaps across the continent.
The AfDB said these interventions were crucial in preventing a deeper contraction in trade activity during periods of global economic stress.
It called for continued support from development finance partners, improved foreign exchange availability, greater digitalisation of trade systems and deeper regional financial integration to strengthen Africa’s trade-driven growth.
The bank added that closing the remaining financing gap would be essential for boosting intra-African commerce under the African Continental Free Trade Area framework and supporting long-term economic transformation.
