Africa’s ambition to unlock the full potential of the African Continental Free Trade Area (AfCFTA) could be significantly undermined unless urgent steps are taken to address the continent’s widening trade finance deficit, according to the 2026 African Trade Report released by Afreximbank.
The report estimates that Africa faces an annual trade finance gap of between US$80 billion and US$120 billion, describing the shortfall as one of the most significant structural barriers preventing the continent from achieving deeper regional economic integration, industrialisation and sustainable economic growth.
Although AfCFTA has established one of the world’s largest single markets by bringing together 54 African countries, Afreximbank says many businesses across the continent continue to struggle to obtain the financing needed to take advantage of growing cross-border trade opportunities.
According to the report, inadequate access to trade finance continues to hinder businesses, particularly small and medium-sized enterprises (SMEs), from securing working capital, importing production inputs, fulfilling export contracts and expanding into new regional markets.
The report notes that while African governments have made considerable progress in reducing tariff barriers and improving market access under AfCFTA, financing constraints are increasingly emerging as the more pressing challenge limiting intra-African trade.
“The financing deficit is limiting the ability of businesses, particularly small and medium-sized enterprises, to secure working capital, import production inputs, fulfil export contracts and expand operations into regional markets,” the report stated.
Afreximbank identified several factors contributing to the persistent financing gap, including elevated sovereign risk perceptions, limited risk-bearing capacity among financial institutions, high transaction costs and weak credit infrastructure across many African economies.
According to the report, these challenges continue to discourage private sector participation in regional trade despite ongoing efforts by governments and policymakers to deepen economic integration across the continent.
The report warned that without sufficient financial support, African businesses would struggle to increase production, compete effectively across borders and fully benefit from the opportunities created by AfCFTA.
It further stressed that addressing financing constraints has become just as important as reducing tariffs if Africa is to accelerate industrial development and strengthen regional value chains.
According to Afreximbank, achieving meaningful growth in intra-African trade will require policymakers to move beyond tariff liberalisation and focus on building stronger financial ecosystems capable of supporting production, exports and cross-border commerce.
“Achieving meaningful growth in regional commerce will require policymakers to move beyond tariff liberalisation and prioritise the development of robust financial ecosystems capable of supporting production, exports and cross-border trade,” the report said.
To bridge the financing gap, Afreximbank recommended expanding trade finance facilities across the continent to provide businesses with easier access to affordable credit.
The report also called for increased use of credit guarantees and blended finance instruments to reduce lending risks and encourage greater private sector investment in trade-related activities.
Additionally, it urged governments and development finance institutions to strengthen their role in mobilising private capital for investments that support regional trade and industrial development.
According to the report, improving access to finance should be complemented by increased investment in industrial ecosystems, digital trade infrastructure and efficient payment systems capable of enhancing the competitiveness of African businesses.
The report argues that such investments would not only lower the cost of doing business across borders but also reduce Africa’s dependence on external markets by strengthening regional supply chains and expanding manufacturing capacity.
Afreximbank also highlighted the importance of the Pan-African Payment and Settlement System (PAPSS), describing it as one of the continent’s most important financial innovations for promoting regional trade.
According to the report, PAPSS enables businesses to make cross-border payments in local currencies, reducing reliance on hard currencies such as the US dollar while lowering transaction costs and speeding up payment settlements between African countries.
The bank believes wider adoption of PAPSS will improve the efficiency of cross-border transactions and remove one of the longstanding obstacles facing businesses engaged in regional commerce.
The report further noted that improving payment systems, alongside expanding trade finance, would significantly enhance Africa’s ability to build stronger regional value chains and increase trade among African countries.
Afreximbank maintained that Africa’s trade challenge has now evolved beyond simply opening markets through trade agreements.
Instead, the report argues that the continent’s long-term success under AfCFTA will increasingly depend on whether businesses have access to affordable financing to manufacture goods, transport products and compete effectively across regional markets.
“The continent’s ability to realise the full economic benefits of AfCFTA will increasingly depend on whether businesses can access affordable financing to produce, transport and sell goods competitively across African markets,” the report stated.
It warned that failure to close the annual trade finance gap could slow Africa’s industrialisation agenda, weaken efforts to strengthen regional value chains and ultimately limit the economic gains expected from the implementation of AfCFTA.
The report concluded that while policy reforms aimed at reducing trade barriers remain important, they must be matched with practical financial solutions that enable businesses to participate fully in regional trade.
Without decisive action from governments, commercial banks, development finance institutions and international development partners, Afreximbank warned that Africa’s vision of building a thriving, integrated continental market could remain difficult to achieve.
As implementation of AfCFTA continues to gather momentum across the continent, the report calls for coordinated efforts to strengthen Africa’s financial architecture, improve access to trade finance and create an enabling environment that allows businesses of all sizes to seize emerging opportunities.
Ultimately, Afreximbank believes closing the US$80 billion to US$120 billion annual trade finance gap will be essential if Africa is to accelerate industrialisation, expand intra-African trade, create jobs and realise the transformative promise of the African Continental Free Trade Area.
