African Development Bank’s 2025 Trade Finance Report Highlights Resilience of Financial Institutions Post-Covid-19 at AM2026

The African Development Bank’s (AfDB) latest Trade Finance Report reveals a resilient landscape for African financial institutions in the aftermath of the COVID-19 pandemic. Released during the Bank Group’s 2026 Annual Meetings in Brazzaville, Republic of Congo, the report underscores the ongoing challenges faced by the continent’s trade finance sector amid a complex global environment.

Context of the Report

The 2025 Trade Finance Report provides a comprehensive assessment of Africa’s trade finance landscape from 2020 to 2024. It introduces critical dimensions such as digitalization and environmental sustainability, while also quantifying the role of Development Finance Institutions (DFIs) in supporting trade finance across the continent.

Anthony Simpasa, Director of the Macroeconomic Policy, Forecasting and Research Department at AfDB, highlighted a notable decline in unmet demand for trade finance, which decreased by nearly 10% between 2019 and 2024. This reduction was largely attributed to proactive interventions from multilateral development banks, governments, export credit agencies, and global banks. Without DFI support, the annual trade finance gap could have surpassed $100 billion during this period.

Key Findings of the Report

The report outlines several critical findings regarding trade finance in Africa:

• The unmet demand for trade finance in 2024 is estimated to range between $74 billion and $92 billion, with the lower figure representing 5.4% of the region’s total merchandise trade value.
• Commercial banks have increasingly underserved African trade, mediating only 23% of total trade over the past five years, a significant drop from 40% during 2011-2019.
• Intra-African trade has shown resilience, accounting for 34% of total bank-intermediated trade between 2020 and 2024, reflecting an 89% increase from pre-pandemic levels.
• Foreign exchange liquidity shortages have emerged as a primary barrier to trade finance growth, with 36% of banks citing this as a significant constraint, up from 18% in the previous five-year period.
• The adoption of digital trade finance solutions remains low, with only 28% of surveyed banks implementing such technologies, primarily due to high costs and inadequate infrastructure.

Implications for the Future

The report’s launch attracted a diverse audience, including policymakers, private-sector leaders, and trade finance experts. Discussions highlighted both opportunities and challenges in unlocking sustainable bank-intermediated trade finance in Africa.

Didier Acouetey, Senior Advisor to the AfDB President, emphasized the importance of systemic initiatives like the New African Financial Architecture for Development (NAFAD). This framework aims to address the trade finance gap comprehensively, rather than on a project-by-project basis.

Francisca Tatchouop Belobe, Commissioner for Economic Development, Trade, Tourism, Industry, and Minerals at the African Union Commission, called for a focus on the ‘missing middle’ in African banking. She noted that small and medium-sized enterprises (SMEs) are often too large for microfinance yet too small for corporate banking, underscoring the need for commercial banks to prioritize SME trade finance as a core business line.

Mehdi Tanani, Regional Director for Central Africa at Proparco, warned that Africa’s trade finance gap cannot be closed by imposing additional constraints. Instead, a more resilient, digital, and sustainable trade finance ecosystem is essential for protecting SMEs against global shocks while facilitating economic integration across the continent.

The Role of Development Finance Institutions

DFIs have played a pivotal role in mitigating the trade finance gap in Africa, facilitating approximately $32 billion in trade finance annually between 2020 and 2024. This figure represents about 3% of Africa’s total merchandise trade during the same period. The AfDB’s Trade Finance Program, established in 2013, has conducted multiple surveys to assess the evolving landscape, including two country-specific reports on Kenya and Tanzania.

The findings of the 2025 Trade Finance Report serve as a crucial resource for stakeholders aiming to enhance the resilience of Africa’s trade finance sector. As the continent navigates post-pandemic recovery, the emphasis on digitalization and sustainable practices will be vital for future growth.

For further insights, the full report can be accessed here.

Source: www.zawya.com

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