Keypoints
- The African Development Bank Group has warned that Africa’s trade finance gap could exceed 100 billion dollars again if rising geopolitical tensions and disruptions to global trade and supply chains persist.
- The warning is contained in the bank’s fifth Trade Finance Report presented on the sidelines of the 2026 Annual Meetings of the AfDB in Brazzaville, Republic of Congo.
- Africa’s unmet demand for trade finance ranged between 74 billion dollars and 92 billion dollars in 2024, representing about 5.4 per cent of the continent’s total merchandise trade value.
- Weaker currencies and tighter correspondent banking conditions could widen the trade finance gap to between 86.6 billion dollars and 102.6 billion dollars by 2027.
- The report identified foreign exchange liquidity shortages as the biggest obstacle to trade finance growth, with 36 per cent of surveyed banks citing limited access to foreign currency as their major constraint.
Main Story
The African Development Bank (AfDB) Group has warned that Africa’s trade finance gap could exceed 100 billion dollars again if rising geo-political tensions and disruptions to global trade and supply chains persist.
The warning is contained in the bank’s fifth Trade Finance Report presented on the sidelines of the 2026 Annual Meetings of the AfDB in Brazzaville, Republic of Congo.
According to the report, Africa’s unmet demand for trade finance ranged between 74 billion dollars and 92 billion dollars in 2024, representing about 5.4 per cent of the continent’s total merchandise trade value.
To evaluate intermediate structural dependencies, financial planners note that a steep drop in commercial lending participation forces local importers to seek alternative liquidity channels to cover basic clearing costs.
The report stated that commercial banks intermediated only 23 per cent of Africa’s total trade between 2020 and 2024. This was down from 40 per cent recorded between 2011 and 2019, showing that African trade remained underserved by commercial lenders.
The report acknowledged that African financial institutions had continued supporting trade activities in spite global economic shocks, renewed geo-political tensions, higher oil and fertiliser prices.
Furthermore, regional banking networks are increasingly stepping in to absorb systemic international credit pullbacks during macro-economic contractions.
The AfDB, however, said Africa had made significant progress in bank-intermediated intra-African trade. According to the report, this accounted for 34 per cent of total bank-supported trade between 2020 and 2024, compared with 18 per cent before the COVID-19 pandemic.
African regional commercial banks are also increasingly playing stronger roles as correspondent and confirming banks, helping to sustain trade flows during periods of crisis.
The Issues
- Mitigating the negative impacts of weaker currencies and tighter correspondent banking conditions that threaten to widen the financing gap.
- Overcoming widespread foreign exchange liquidity shortages that limit banks’ access to foreign currency.
- Addressing the low adoption of digital trade finance solutions caused by high implementation costs and weak technological infrastructure.
What’s Being Said
- Highlighting the critical intervention role played by multilateral lending institutions to stabilize the continental marketplace, the report noted that “development finance institutions, including the AfDB, played a major role in narrowing Africa’s trade finance gap by facilitating about 32 billion dollars in trade finance annually between 2020 and 2024.”
- Outlining the technological barriers hindering modern operational updates across regional commercial infrastructure, the document stated that “only 28 per cent of surveyed banks had adopted digital platforms for trade finance operations due to high implementation costs and weak technological infrastructure.”
- Quantifying the precise percentage of financial operators pointing to hard currency deficits as their primary operational block, the study found that “foreign exchange liquidity shortages as the biggest obstacle to trade finance growth, with 36 per cent of surveyed banks citing limited access to foreign currency as their major constraint.”
What’s Next
- Development finance institutions will continue working to narrow the gap by facilitating vital trade finance injections across the continent.
- Regional commercial banks will likely take on stronger roles as correspondent and confirming banks to shield trade flows from external disruptions.
- Financial stakeholders will need to address high implementation costs to improve the adoption rate of digital trade finance platforms.
Bottom Line
The AfDB’s fifth Trade Finance Report warns that persistent global shocks and currency depreciation could push Africa’s trade finance gap past 100 billion dollars by 2027, with commercial bank intermediation plummeting to 23 per cent amidst severe foreign exchange liquidity shortages and weak digital infrastructure adoption.
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