African Development Bank’s 2025 Trade Finance Report Strengthens Outlook for Resilient African Financial Institutions Post-Covid-19

The African Development Bank (AfDB) has released its fifth edition of the Trade Finance Report, highlighting the resilience of African financial institutions in the aftermath of the COVID-19 pandemic. The report, unveiled during the Bank Group’s 2026 Annual Meetings in Brazzaville, Republic of Congo, provides a comprehensive assessment of Africa’s trade finance landscape from 2020 to 2024.

Key Findings on Trade Finance Demand

The 2025 Trade Finance Report reveals a significant decline in unmet demand for trade finance, dropping nearly 10% between 2019 and 2024. This reduction is attributed to robust interventions from multilateral development banks, governments, export credit agencies, and global banks, which have been pivotal in maintaining trade flows. Without the support of Development Finance Institutions (DFIs), the annual trade finance gap could have exceeded $100 billion during this period.

Anthony Simpasa, Director of the Macroeconomic Policy, Forecasting and Research Department at AfDB, emphasized the ongoing risks to trade finance. He warned that renewed geopolitical tensions and disruptions to global supply chains could reverse the progress made since the pandemic. Simpasa noted that under a moderate to severe scenario, the trade finance gap could widen to between $86.6 billion and $102.6 billion by 2027, representing a potential increase of at least 17.7% over 2024 levels.

Trade Finance Landscape and Challenges

The report highlights several critical aspects of the trade finance landscape in Africa:

• The unmet demand for trade finance in 2024 is estimated to range from $74 billion to $92 billion, with the lower estimate constituting 5.4% of the region’s total merchandise trade value.
• Commercial banks continue to under-serve African trade, with their share of total trade intermediation declining from 40% in 2011-2019 to an average of 23% over the five years studied.
• Intra-African trade has seen a resurgence, accounting for 34% of total bank-intermediated trade between 2020 and 2024, marking an 89% increase from pre-pandemic levels.
• A significant barrier to trade finance growth is the shortage of foreign exchange liquidity, with 36% of banks citing this as a primary constraint, compared to just 18% in the 2015-2019 period.
• The adoption of digital trade finance solutions remains limited, with only 28% of surveyed banks implementing digital tools or platforms due to high costs and inadequate technological infrastructure.

Panel Discussion Insights

Following the report’s launch, a panel discussion featured key figures including Didier Acouetey, Senior Advisor to the AfDB President, and Francisca Tatchouop Belobe, Commissioner for Economic Development at the African Union Commission. They discussed the implications of the report’s findings and the challenges and opportunities for sustainable bank-intermediated trade finance in Africa.

Admassu Tadesse, Group President and Managing Director of the Trade and Development Bank, highlighted the potential for innovations such as digitization and asset management initiatives to expand the trade finance asset class. He advocated for systemic initiatives like the New African Financial Architecture for Development (NAFAD) to enhance the impact of African capital and attract global investment.

Acouetey remarked on the importance of NAFAD in providing a coherent framework to address the trade finance gap systematically, emphasizing its significance for small and medium-sized enterprises (SMEs).

Belobe stressed the need to address the ‘missing middle’ in African banking, advocating for commercial banks to treat SME trade finance as a core business line rather than a secondary activity. Tanani, Regional Director for Central Africa at Proparco, underscored the necessity of building a resilient, digital, and sustainable trade finance ecosystem to protect SMEs from global shocks and promote economic integration across the continent.

Role of Development Finance Institutions

The report underscores the crucial role played by the African Development Bank and other DFIs in narrowing the trade finance gap. Between 2020 and 2024, DFIs facilitated approximately $32 billion in trade finance annually, accounting for about 3% of Africa’s total merchandise trade during this period.

The AfDB’s Trade Finance Program, established in 2013, has conducted periodic surveys, including two country-specific reports on Kenya and Tanzania, to monitor and enhance the trade finance landscape.

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

Source: www.zawya.com

Published on 2026-05-29 14:38:00 • By the Editorial Desk

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