Trade is a key driver of economic growth and poverty reduction and drives the exchange of goods and services, capital movement, and fosters cultural links between people and between countries. It is an important catalyst for regional economic integration, economic growth and poverty reduction. Botswana, Namibia and Mauritius are examples of countries that have transformed themselves from low to middle income countries by improving their ability to trade in regional and global markets (ITC, 2018).
However, Africa is yet to address the constraints to trade and fully capture its growth-enhancing benefits. Expanding trade within Africa and with the rest of the world remains a challenge due in large part to a trade finance gap estimated at more than US$100 billion. Filling this gap means addressing the obstacles African banks face in expanding access to trade finance. These include low US dollar liquidity, the costs and complexities of regulatory compliance - including Basel III and anti-financial crime regulation, and the inability to assess the credit-worthiness of potential borrowers. Boosting Africa’s intra-regional and international trade also requires a good understanding of the African trade finance landscape.
Despite trade’s importance as an engine of growth, Africa’s share of global trade is only estimated at 3%, with an even lower share of intra-regional trade compared to other regions (Africa:15%, European Union:63%, North America: 50%, and Asia:52%). Increased intra-African trade can contribute towards the development of cross-border infrastructure, catalysing intra-regional investment, and reducing the constraints of unfavourable boundaries for landlocked countries.
NEWS & EVENTS
We are a multi-donor initiative with a strong partnership and collaborative mindset. We work with a variety of local, regional, and international institutions, both public and private, in order to achieve our mission to develop the African financial systems. Below is a summary of the institutions we work with to support the development of trade finance in Africa.