Chris Oshiafi PAC Research, one of Nigeria’s leading research outfits, has identified financial architecture, digital innovation, regulatory reforms and political commitment as critical to addressing Africa’s more than $100 billion unmet trade finance gap. The research outfit said digital payment systems, blockchain-enabled trade infrastructure, factoring and supply chain finance could significantly widen access to trade finance across the continent, but stressed that their effectiveness would depend on regulatory reforms, legal harmonisation, institutional capacity and sustained political commitment. The recommendations are contained in its latest policy brief, titled “Financial Architecture, Digital Innovation, and Inclusive Growth: Contemporary Trade Finance Solutions for Africa,” produced by a team led by Chris Oshiafi. “Initiatives such as PAPSS, ADAPT, and the scaling of factoring markets demonstrate a credible pathway toward more inclusive trade finance. Their full impact, however, will depend on implementation capacity, market trust, and the ability of African states to align financial innovation with broader integration requirements,” PAC Research stated. Trade finance encompasses financial instruments that facilitate international commerce, including letters of credit, factoring and supply chain finance. These instruments are particularly important in Africa, where businesses often contend with extended payment cycles, foreign exchange risks, limited access to working capital and trust deficits between buyers and sellers operating across borders. According to PAC Research, drawing on the African Development Bank’s 2025 Trade Finance Report and research by the African Export-Import Bank (Afreximbank), Africa’s unmet demand for trade finance is estimated at between $74 billion and $100 billion. The financing shortfall, it said, threatens not only individual businesses but also Africa’s broader capacity to expand exports, participate more effectively in global value chains and achieve inclusive economic growth. AfCFTA and the trade finance challenge The trade finance challenge has become increasingly important following the launch of the African Continental Free Trade Area (AfCFTA), which seeks to deepen economic integration and increase intra-African trade. Africa’s total merchandise trade expanded by 6.1 per cent to approximately $1.5 trillion in 2025, while real GDP growth accelerated from 3.4 per cent in 2024 to 4.5 per cent in 2025, outperforming the global average of 2.9 per cent. Intra-African trade also increased by 5.47 per cent to $213.8 billion in 2025 from $202.7 billion in 2024, driven largely by stronger trade performance in countries including Ethiopia, Uganda, the Democratic Republic of Congo and Zambia. South Africa remained the largest contributor to intra-African trade, accounting for 19.2 per cent of the total in 2025, with exports to other African markets valued at $31.1 billion. Côte d’Ivoire accounted for 4.83 per cent, with its position supported by its membership of the West African Economic and Monetary Union (WAEMU) and the Economic Community of West African States (ECOWAS). Afreximbank has projected that intra-African trade could double within a decade if the AfCFTA is fully implemented. However, PAC Research noted that the positive trade trend masks significant structural weaknesses in Africa’s financial system. Commercial banks now intermediate only about 23 per cent of Africa’s total trade on average, compared with 40 per cent between 2011 and 2019. This compares with developed markets, where bank-intermediated finance typically supports between 60 and 80 per cent of goods trade. The decline in bank intermediation, the research outfit warned, could undermine the continent’s progress towards deeper regional integration. SMEs bear the brunt Small and medium-sized enterprises (SMEs), which constitute the overwhelming majority of African businesses and play a critical role in employment and economic output, are particularly exposed to the trade finance deficit. Banks and other financial institutions often cite inadequate collateral and high perceived risk when rejecting trade finance applications. PAC Research noted that more than 20 per cent of trade finance applications are rejected for these reasons, despite trade finance historically recording lower default rates than many other lending categories. The financing challenge is compounded by what the African Development Bank describes as “self-rationing”, with 16.5 per cent of firms with legitimate financing needs choosing not to apply because they fear rejection. Foreign exchange as major constraint “About 36% of banks cited limited foreign exchange liquidity as the primary constraint to their trade finance growth between 2020 and 2024, compared with 18% in the 2015–2019 period—a
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