Afreximbank: Africa’s $100 Billion Trade Finance Gap Puts AfCFTA and SMEs at Risk
Africa faces $100 billion annual trade finance gap, which constitutes a major hurdle to unlocking the full potential of the African Continental Free Trade Area (AfCFTA).
This is according to a newly launched report titled “African Trade Report 2025: African Trade in a Changing Global Financial Architecture” by the African Export-Import Bank (Afreximbank).
In the report, Afreximbank stated, “Africa faces about US$100 billion annual trade finance gap. This severely limits the ability of small and medium enterprises, which make up 80 to 90 percent of businesses on the continent, to engage in regional trade.”
The bank stated that just 18 percent of African banks’ trade finance portfolios support intra-African trade, reflecting a bias towards external markets.
“This shortfall,” according to the Afreximbank, has been “exacerbated by high borrowing costs and stringent global banking regulations such as Basel IV, which restrict the small and medium enterprises from scaling up their operations and integrating them into regional value chains.”
The bank stated further, “The AfCFTA is designed to boost intra-African trade, but its success hinges on closing this gap. Initiatives like Afreximbank’s $17.5 billion trade finance disbursements and PAPSS are critical steps, yet broader access to affordable credit and harmonised financial regulations remain urgent priorities to unlock the full potential of the continental agreement.”
Africa’s declining share of global exports due to geopolitical tensions
The report further stated that Africa’s declining share of global exports from 3.5 percent in 2009 to 3.2 percent in 2023 was largely driven by geopolitical tensions and protectionist policies.
According to the Afreximbank, “The rivalry between the United States and China over semiconductors and critical minerals disrupts supply chains, limiting Africa’s participation in high-value sectors like electronics. Meanwhile, global protectionism, including the European Union’s Carbon Border Adjustment Mechanism and tariffs imposed by the United States, threatens African exports.”
The bank stated that Africa’s rich deposits of critical minerals such as cobalt and lithium attract global interest, but partnerships risk perpetuating exploitative models with limited local value addition.
“Strengthening African-led value chains by establishing the AfCFTA and investing in infrastructure and digital finance are essential to enhance resilience and reduce reliance on volatile global markets,” the bank added.
What you should know
The flagship report was launched by Prof. Benedict O. Oramah, President and Chairman of the Board of Directors of Afreximbank; Vice President of the Federal Republic of Nigeria, Kashim Shettima(represented by Mr. Tope Fasua); Mr. Denys Denya, Senior Executive Vice President of Afreximbank; and other top executives at the ongoing Afreximbank Annual Meetings attended by Nairametrics on Wednesday.
According to the African Union (AU), AfCFTA is one of the Flagship Projects of Agenda 2063, Africa’s development framework.
The AfCFTA was approved by the 18th ordinary Session of the Assembly of Heads of State and Government, held in Addis Ababa, Ethiopia in January 2012 which adopted the decision to establish an African Continental Free Trade Area and the Action Plan for Boosting intra-African trade as a key initiative whose implementation would promote socio-economic growth development.
