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The African Export-Import Bank (Afreximbank) has sounded the alarm on the continent’s deepening trade finance gap, estimating that Africa faces an annual shortfall of approximately US$100 billion, a critical constraint that is stifling the growth of intra-African trade, particularly among small and medium enterprises (SMEs).
The warning comes in the newly launched Africa Trade Report 2025, unveiled in Abuja, Nigeria, by Dr. Yemi Kale, Group Chief Economist at Afreximbank, under the theme “African Trade in a Changing Global Financial Architecture.”
According to the report, the finance shortfall severely limits the ability of SMEs—which represent 80 to 90 percent of all businesses in Africa—to participate meaningfully in regional trade.
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“Only 18 percent of African banks’ trade finance portfolios currently support intra-African trade,” the report noted, “reflecting a persistent bias towards external markets.”
The report attributed this shortfall to a combination of factors including high borrowing costs, stringent global banking regulations such as Basel IV, and inadequate credit infrastructure.
These challenges, the Bank said, are hindering the ability of SMEs to integrate into regional value chains—a core objective of the African Continental Free Trade Area (AfCFTA).
While Afreximbank highlighted positive initiatives such as its US$17.5 billion in trade finance disbursements and the rollout of the Pan-African Payment and Settlement System (PAPSS), it warned that broader access to affordable credit and harmonized financial regulations remained urgent priorities if AfCFTA is to achieve its transformative goals.
“The success of the AfCFTA will ultimately depend on the ability of the continent to close the trade finance gap and ensure SMEs can scale up and compete across borders,” the report emphasized.
The Africa Trade Report also painted a sobering picture of the global trade environment, revealing that renewed headwinds—including protectionism, geopolitical tensions, and declining investor confidence—are threatening global merchandise trade.
While earlier World Trade Organization (WTO) projections had forecast 2.7 percent growth in global merchandise trade for 2025, the latest estimates now point to a contraction of 0.2 percent, down sharply from the 2.9 percent growth recorded in 2024.
“African trade is not insulated from these shocks,” the report cautioned. However, it added that Africa is expected to remain among the most resilient regions, with import growth projected at 6.2 percent, second only to the Middle East.
The report credited this resilience to several structural trends: strong commodity markets, particularly oil; growing South-South trade; and deepening economic ties with Asia, especially China, now Africa’s single largest trading partner.
Additionally, the European Union’s rising demand for African energy exports has positioned countries such as Algeria, Angola, and Egypt as key alternative suppliers of liquified natural gas.
Afreximbank also highlighted the essential role of development finance institutions in supporting African trade amid global volatility.
Through counter-cyclical financing tools like the Ukraine Crisis Adjustment Trade Financing Programme, the Bank has been helping member countries offset import shocks, refinance commodity-linked loans, and safeguard critical sectors.
The report stated: “These programmes have helped member countries meet immediate import price increases, maintain debt servicing, and address food and fertilizer shortages.”
In support of AfCFTA implementation, Afreximbank is also investing in industrial parks, special economic zones, and accelerator programmes for trade-focused startups across the continent, offering both equity funding and mentorship.
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