Towncrier Editorial Desk
Africa is trading more, but too many African businesses still struggle to finance the trade they are already capable of doing.
That is the central tension behind one of the most important findings in Afreximbank’s African Trade Report 2026. The report says Africa’s trade finance gap remained about US$74 billion in 2025, reflecting persistent constraints linked to low foreign exchange liquidity, limited correspondent banking relationships and restrictive financing conditions across the continent.
The figure matters because it sits behind many of Africa’s bigger economic ambitions. The African Continental Free Trade Area can open markets. Regional logistics projects can reduce the cost of movement. Digital payment platforms can simplify settlement. But without accessible trade finance, exporters, importers, manufacturers and small businesses will remain unable to fully participate in regional and global trade.
A Financing Gap Behind the Trade Numbers
The trade finance gap is not simply a banking-sector problem. It is a production, employment and industrialisation problem.
Trade finance includes the credit, guarantees and payment instruments that allow businesses to move goods across borders. It covers tools such as letters of credit, working capital facilities, invoice finance, import finance and guarantees that reduce risk between buyers and sellers. In economies where trust, currency stability and cross-border payment systems are still developing, these instruments are essential.
For large companies with strong banking relationships, trade finance can be a routine part of doing business. For small and medium-sized enterprises, it can be the difference between taking an order and losing it. Many African firms can identify customers, source goods and build regional demand, but cannot secure the financing needed to buy inputs, process orders, insure transactions or wait for payment.
This is why the US$74 billion figure is so important. It shows that Africa’s trade challenge is not only about tariffs, borders or infrastructure. It is also about balance sheets, liquidity and risk appetite.
Why African Exporters Are Still Constrained
Afreximbank’s report links the gap to structural constraints in the financing environment. Low foreign exchange liquidity remains a major problem in several African markets. When businesses cannot access foreign currency reliably, importing inputs or settling cross-border transactions becomes more expensive and uncertain.
Limited correspondent banking relationships also weaken the ability of African banks to support international transactions. Over the past decade, many global banks have reduced relationships with banks in emerging and developing markets because of compliance costs, regulatory risk and profitability concerns. The result is that African banks often face higher transaction costs and weaker access to global payment channels.
These constraints are especially damaging for SMEs. Smaller firms typically lack collateral, audited financial histories, strong credit records and long-standing bank relationships. Even when they operate in productive sectors, they are often seen as high-risk borrowers. That leaves a large share of African enterprise activity outside formal trade-finance channels.
The result is a paradox: Africa can have growing trade opportunities while still leaving many of its most dynamic businesses underfinanced.
The AfCFTA Needs Finance, Not Only Market Access
The African Continental Free Trade Area is often discussed as a market-access project. That is correct, but incomplete. Reducing tariffs and improving trade rules will not automatically increase trade if firms cannot finance production, logistics and settlement.
For the AfCFTA to move from policy ambition to commercial reality, African businesses need the financial tools to use the market being created. A Ghanaian manufacturer seeking buyers in Senegal, a Kenyan agribusiness exporting to Rwanda or a Nigerian supplier selling into Côte d’Ivoire all need more than trade agreements. They need working capital, currency solutions, insurance, payment reliability and bankable transaction structures.
This is where trade finance becomes central to integration. Without it, the benefits of AfCFTA may be captured disproportionately by larger corporates, while smaller firms remain confined to domestic markets or informal cross-border trade.
PAPSS and Development Finance Institutions Have a Role
The report’s wider policy framing points to the importance of deeper digital payment systems, expanded intra-African trade finance and stronger development-finance interventions. The Pan-African Payment and Settlement System, developed to support cross-border payments in local currencies, is one part of that architecture.
PAPSS cannot close the trade finance gap on its own. But by reducing dependence on third-party currencies for intra-African transactions, it can help lower settlement frictions and support more predictable payments between African markets. This matters particularly for SMEs that are sensitive to foreign-exchange costs and delays.
Development finance institutions also have a clear role. Institutions such as Afreximbank, regional development banks and national development finance institutions can provide guarantees, lines of credit and risk-sharing facilities that encourage commercial banks to lend into trade sectors. They can also help structure financing around priority areas such as manufacturing, agriculture, logistics, pharmaceuticals, renewable energy and light industry.
However, the goal should not be permanent dependence on development-bank intervention. The real test is whether these instruments can crowd in more private capital, strengthen local banking capacity and make trade finance more accessible through ordinary commercial channels.
Why the Gap Matters for Industrialisation
Africa’s industrialisation ambitions depend on firms being able to import inputs, process raw materials, move finished goods and manage payment cycles. A factory that cannot finance raw materials cannot produce at scale. An exporter that cannot insure or finance shipments cannot reach new markets. A distributor that cannot obtain working capital cannot build reliable regional supply chains.
This is why trade finance is directly connected to value addition. If African countries want to move beyond exporting raw commodities, they need firms that can finance intermediate goods, machinery, packaging, logistics and inventory. Industrialisation requires liquidity before it produces returns.
The gap also affects job creation. SMEs are major employers across African economies, but many are undercapitalised. Closing even part of the trade finance gap could help firms expand production, meet larger orders and enter new markets, creating employment in sectors that are more productive than informal low-margin trade.
Closing the Gap Will Require More Than Credit Lines
Credit lines are useful, but they are only part of the answer. Africa’s trade finance gap reflects deeper issues: weak credit information systems, currency instability, documentation challenges, high perceived risk, limited collateral frameworks and uneven regulatory environments.
Addressing the gap will require coordinated reforms. Governments need to strengthen customs processes, improve trade documentation and support predictable currency frameworks. Banks need better tools for SME credit assessment. Development finance institutions need to provide risk-sharing mechanisms that make lending commercially viable. Digital platforms need to simplify verification, settlement and transaction records.
The opportunity is significant. If Africa can narrow the US$74 billion trade finance gap, the continent could unlock more than additional export volumes. It could support deeper regional value chains, improve private-sector resilience and make the AfCFTA more meaningful for ordinary businesses.
The message from the African Trade Report 2026 is clear: Africa’s trade future will not be shaped by market access alone. It will also be shaped by who can get financed, at what cost and under what conditions.
Source: Afreximbank, African Trade Report 2026: Leveraging Geopolitics for Trade and Industrialisation in Global Africa.
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