Africa loses $120 billion annually to trade finance gap - Report

Africa is leaving an estimated US$120 billion on the table every single year due to a severe trade finance deficit that is choking off internal commerce.

According to the newly released 2026 African Trade Report by Afreximbank, this massive funding bottleneck is actively stalling the momentum of the African Continental Free Trade Area (AfCFTA).

Despite significant policy strides to open up regional borders, a lack of accessible credit remains a critical barrier to the continent's industrialization and economic unity goals.

The report notes that small and medium-sized enterprises (SMEs) which form the backbone of the continent's private sector are bearing the brunt of the crisis.

Many local businesses find themselves completely locked out of the financial resources needed to handle basic operations such as importing inventory, fulfilling regional orders, or scaling their operations across borders.

The report points to several structural challenges behind the financing shortfall. Elevated sovereign risk perceptions discourage investment, while financial institutions often lack the risk-bearing capacity needed to support trade.

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Also, there are high transaction costs and weak credit infrastructure across many economies.

Together, these constraints suppress private sector participation in regional trade, despite growing policy efforts to deepen integration.

To close the gap, the report recommends expanding trade finance facilities, increasing the use of credit guarantees and blended finance instruments.

These, it said, will strengthen the role of development finance institutions in mobilising private capital.

It also highlighted the need for greater investment in industrial ecosystems, digital trade infrastructure, and efficient payment systems.

By addressing these barriers, the report noted that Africa could improve the competitiveness of its businesses, unlock the full potential of intra-African trade, and reduce dependence on external markets.

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