Trade Finance in Africa: Overcoming Challenges

Oct 06, 2017 | African Development Bank (AfDB) | AfDB

The objective of this report is to deepen our understanding of the challenges facing bank-intermediated trade finance in Africa. Since the launch of the first survey in 2013 (covering the period 2011-2012), the trade finance landscape in Africa has evolved in terms of the overall size of bank-intermediated trade finance, unmet demand, and the performance of banks’ trade finance portfolios, among others. The second survey launched in 2015 (covering the period 2013-2014) not only builds on the findings of the first one, but goes beyond to gauge other aspects of bank intermediated trade finance including challenges encountered by SMEs and first time trade finance clients. This report is based on the combined data from the two rounds of surveys mentioned above and outlines the following main findings: 1. Bank-intermediated trade finance is a non-negligible part of Africa’s total trade; 2. The share of bank-intermediated trade finance devoted to intra-African trade is still modest; 3. The value of the bank-intermediated trade finance gap in Africa remains significant, although it has nudged down slightly from an estimated USD 94 billion in 2013 to USD 91 billion in 2014; and 4. Trade finance continues to be a relatively low-risk activity for commercial banks in Africa.