Africa is facing a massive $100 billion annual trade finance shortfall that is increasingly undermining efforts to unlock the full potential of the African Continental Free Trade Area (AfCFTA), according to the African Trade Report 2025 released by the African Export-Import Bank (Afreximbank).
The report, titled “African Trade in a Changing Global Financial Architecture,” paints a sobering picture of the financial obstacles impeding the continent’s economic integration goals.
The bank warns that unless this funding gap is addressed urgently, Africa’s efforts to boost intra-regional trade and establish resilient supply chains through the AfCFTA will stall. Despite efforts to increase trade within the continent, only 18% of African banks’ trade finance portfolios currently support intra-African trade, highlighting a continued bias towards external trade and a lack of support for local value chains.
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“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,” Afreximbank stated.
AfCFTA: A $3.4 Trillion Market at Risk
The AfCFTA, officially launched in January 2021, aims to create a unified African market of 1.4 billion people with a combined GDP of $3.4 trillion. It is one of the African Union’s most ambitious economic integration initiatives under Agenda 2063, intended to eliminate trade barriers, reduce tariffs, and facilitate the movement of goods, services, and people across the continent.
According to the African Union, successful implementation of the AfCFTA could boost intra-African trade by more than 50% by 2030, foster industrialization, create millions of jobs, and reduce poverty levels. However, these goals remain elusive in the face of financial exclusion and fragmented regulatory systems.
“The AfCFTA is designed to boost intra-African trade, but its success hinges on closing this gap,” the report noted, adding that limited access to affordable credit has left SMEs unable to scale and plug into continental value chains.
Afreximbank has attempted to address these gaps through its $17.5 billion in trade finance disbursements and the launch of initiatives such as the Pan-African Payment and Settlement System (PAPSS), which enables cross-border transactions in local currencies. However, these steps fall short of solving the broader structural problems, including high borrowing costs, lack of harmonized regulations, and weak financial infrastructure.
External Headwinds and Global Trade Shifts
Beyond internal challenges, the report also highlights external pressures. Africa’s share of global exports has declined from 3.5% in 2009 to 3.2% in 2023, a drop attributed largely to geopolitical tensions, protectionist trade policies, and the continent’s continued reliance on exporting raw materials rather than processed goods.
The report identifies escalating competition between China and the United States, particularly over access to critical minerals and semiconductor technologies, as key factors disrupting global supply chains. These shifts have left Africa’s extractive economies exposed to market volatility and reduced their participation in high-value sectors like electronics and green energy.
“The rivalry between the United States and China over semiconductors and critical minerals disrupts supply chains, limiting Africa’s participation in high-value sectors,” Afreximbank said.
At the same time, the European Union’s Carbon Border Adjustment Mechanism and new U.S. tariffs are beginning to hurt African exports by penalizing carbon-intensive goods, further squeezing economies dependent on primary commodity exports.
Despite Africa’s rich deposits of lithium, cobalt, and rare earth elements—resources increasingly in demand for global clean energy transitions—the report warns that foreign investment models continue to prioritize extraction over local beneficiation, perpetuating a cycle of economic dependency.
Policy Recommendations
The report calls for the urgent mobilization of resources and political will to address the continent’s financial bottlenecks. Among its recommendations:
- Expand local credit facilities targeted at SMEs
- Harmonize regulatory frameworks across African financial institutions
- Increase investment in cross-border infrastructure and digital trade platforms
- Strengthen institutions like Afreximbank and African Development Bank to scale up support
The bank emphasized that without deliberate and coordinated efforts to close the trade finance gap, Africa risks missing the transformative opportunity presented by the AfCFTA.
“Strengthening African-led value chains and investing in infrastructure and digital finance are essential to enhance resilience and reduce reliance on volatile global markets,” the report concluded.
The flagship report was unveiled at the Afreximbank Annual Meetings, with key stakeholders in attendance including Prof. Benedict Oramah, President and Chairman of Afreximbank; Vice President Kashim Shettima (represented by Mr. Tope Fasua); and Denys Denya, Senior Executive Vice President of Afreximbank. The launch underscored the urgent need for a paradigm shift in Africa’s trade financing architecture to match the scale and ambition of the AfCFTA.