Who is drawing Africa’s new trade finance map?

Trade Treasury Payments’ Deputy Editor Carter Hoffman spoke with Eugene Bempong Nyantakyi, Chief Research Economist, and Lamin Drammeh, Head of Trade Finance, both at the African Development Bank, to explore the findings of the Bank’s latest trade finance survey.

For a decade, the African Development Bank has been asking African banks who they are financing, who they are turning away, and why. Released at the AfDB’s Annual Meetings in Brazzaville last month, the latest edition makes for unexpectedly good reading.

The standard account of trade finance in Africa begins with the ‘trade finance gap’ – businesses that cannot move their goods because no one will underwrite the paperwork. It is a familiar framing, but it tends to flatten a more complicated picture.

The AfDB’s periodic survey is the only systematic attempt to measure this market from the inside, polling banks across the continent on their trade-finance volumes, approval rates, reasons for rejection, and constraints. Without it, the shortfall would remain largely invisible: a problem everybody suspected, but nobody could properly quantify.

When the Bank first conducted this survey in 2013 and 2014, it estimated Africa’s unmet trade finance demand at around $120 billion. By the eve of COVID, it had fallen to roughly $94 billion. The new report, covering 2020 to 2024, shows a further fall to $74 billion: a 40% reduction over a decade that included a global pandemic, an inflation shock, and the worst supply-chain disruption in living memory.

Eugene Bempong Nyantakyi, the AfDB’s Chief Research Economist, was candid about what he expected going in. “We were expecting that a lot of the gains we had made pre-COVID would be erased. But obviously, as the data says, that is not what really happened.”

Different hands on the instruments

Lamin Drammeh, the AfDB’s Head of Trade Finance, has a wry definition of success in development banking: the best outcome is the one where you’re no longer needed. That day remains some way off. The AfDB and its peers put roughly $32 billion into trade finance annually over the period – guaranteeing deals so that African commercial banks could lend far beyond what their own balance sheets would support. Without that backstop, the report estimates, unmet demand would have exceeded $100 billion every year.

African banks have been charting territory that international banks abandoned. After 2008, UK and European institutions pulled back from the continent. Where the top ten banks backing African trade once included only one or two domestic institutions, six of the current top seven are now African. The economics are straightforward: lower default rates, stronger fee income. Make that visible and behaviour follows.

Not every number points the same way. The share of African trade backed by commercial banks has fallen from 38% before the pandemic to around 23%. Large portions of the map remain blank.

The cost of not applying

Across Africa, small businesses receive only 22% of bank trade finance lending and face an approval rate of around 63%, against 80% for applications overall.

AfDB research in Kenya and Tanzania asked firms how they respond when their trade finance applications are turned down. Seventeen per cent stopped exporting altogether. Others switched to informal channels. And some never applied for what they actually needed, scaling back their ambitions before a bank could refuse them. These are firms with genuine demand for their products who choose in advance to leave that demand unmet. They do not appear in rejection statistics. They are the blank space on the map that no survey quite captures.

Drammeh described visiting a fishing SME in Mauritania that had received support through a local bank backed by an AfDB credit line. The business had been struggling, not from any operational failing but from a straightforward inability to access finance. With the facility in place, it replaced ageing equipment, improved its processes, retained its workers and took on more. “For every employee you see,” Drammeh said, “there may be five, six, seven other people behind them that benefit from their having employment.” Stories like this rarely make the data.

The trade that stays home

Between 2020 and 2024, intra-African trade accounted for 34% of bank-intermediated trade finance, an 89% increase on pre-pandemic levels. A decade ago, Standard Bank was the only African institution in the top ten confirming banks on the continent. Now there are six. African regional banking groups, Drammeh argued, have been the primary engine of that growth, and as their confidence and capacity have grown, so has the share of trade they support.

Some of this also reflects the gradual expansion of PAPSS, the Pan-African Payment and Settlement System run by Afreximbank, which enables cross-border transactions in local currencies and is beginning to loosen the dollar dependence that has long made intra-continental commerce unnecessarily expensive. PAPSS could save African enterprises $5 billion in transaction costs annually.

Known hazards

The dollar still accounts for 88% of foreign trade invoice volumes across Africa. When global conditions tighten, the continent feels it first. Foreign exchange liquidity constraints now top the list of banks’ concerns, cited by 36% of surveyed institutions, double the rate seen five years earlier. The AfDB modelled what a sustained oil price rise would do: if crude reaches $105 a barrel, unmet demand could climb back to between $86.6 billion and $102.6 billion by 2027, erasing a decade of progress in a few years. The Basel III Endgame, which began implementation in July 2025, requires banks to hold more capital in reserve. With less to lend, international banks may pull back further still.

Nyantakyi flagged two indicators worth watching: the pace of digitisation among African banks, which determines how well they can assess and serve SMEs as the market modernises; and rejection rates, which are the earliest signal that something structural is going wrong. When those start rising, he said, the first question is why. The answer usually points back to something in the broader economy before it shows up anywhere else.

Drammeh’s definition of success: get the SME rejection rate into the low teens, and get 80% or more of small businesses able to access trade finance at a manageable cost. “We’re not there yet. But that’s our dream.”

It is a modest dream, in the end. A fishing company in Mauritania replaces its equipment, keeps its workers on, and takes on more. Multiply that across the continent, and you have something worth mapping. The question is whether the new cartographers – African banks, DFIs, payment systems built for the continent by the continent – can hold the ground they have gained when the next disruption arrives.

3 key takeaways:

•       The banks. Six of the top seven confirming banks in Africa are now domestic institutions, a remarkable shift from a decade ago. But commercial banks still intermediate only 23% of African trade, down from 38% before the pandemic.

•       The data. Default rates on small-business trade finance are only marginally higher than those for large corporates. The risk perception banks apply is not justified by the credit data. Better digitisation, on both sides of the transaction, is the most realistic near-term fix.

•       The risk. 10 years of effort has reduced unmet demand from $120 billion to $74 billion. The AfDB’s own modelling shows a sustained oil price rise could reverse most of that within three years.

 The AfDB’s 2025 Trade Finance Survey, Trade Finance Supply in Africa: Post-COVID Trends and Emerging Opportunities, is available at afdb.org. The full podcast with Eugene Bempong Nyantakyi and Lamin Drammeh is available above.