Why Innovative Financing Matters Now More Than Ever
Africa faces a persistent $120 billion-plus trade finance gap that limits its ability to move beyond raw material exports and into value-added production and industrialization. At the recent Africa Business Forum 2025 hosted by the United Nations Economic Commission for Africa (UNECA), stakeholders from key industries, including financial institutions, multilateral organizations, and private sector entities, emphasized the urgent need to strengthen regional value chains through a multisectoral approach and the need for African financial institutions to help realize this objective. With increasing global economic pressures – including rising interest rates and de-risking steps by international financial institutions – African businesses are struggling to access the capital needed to scale production, integrate into regional and global value chains, and expand exports. Without sufficient trade finance, Africa risks missing a crucial window to industrialize, create jobs, and build resilient economies that are less dependent on commodity price fluctuations.
“We need stronger partnerships, innovative financing solutions, and a renewed commitment to turn Africa’s raw potential into refined power.” Yeabsira Zewdie
Unlocking Africa’s trade finance potential requires greater engagement from development financial institutions and private investors who recognize the continent’s industrial and export opportunities. Institutional investors have a crucial role to play in bridging Africa’s trade finance gap by providing longer-term capital to businesses driving additional value and regional trade. Concurrently, development financial institution through blended finance solutions, risk-sharing mechanisms, and targeted investment funds, can help de-risk trade finance in Africa, enabling local businesses to expand production and access international markets. Strengthening partnerships between African financial institutions and international investors is key to ensuring that the continent can move from raw material exports to competitive, value-added goods that drive sustainable economic growth.
Trade finance is not just about facilitating transactions – it is essential for structuring long-term capital that enables African industries to process raw materials locally, manufacture competitive goods, and increase exports. Traditional financing models in Africa have proven insufficient, thus highlighting the need for innovative solutions that can address liquidity constraints and investment risks.
Africa’s leading development financial institutions have been at the forefront of developing trade-focused investment platforms to address this challenge. For example, Afreximbank has played a pivotal role in unlocking capital for African businesses through a suite of trade finance solutions, including structured trade finance, risk-sharing instruments, and targeted investment vehicles.
Beyond Afreximbank, other African multilateral financial institutions are also addressing trade finance gaps: The African Development Bank (AfDB) supports trade finance through its Trade Finance Program (TFP), providing guarantees and liquidity to African financial institutions. The Africa Finance Corporation (AFC) is mobilizing capital to finance trade-enabling infrastructure, such as ports, logistics, and energy. The Trade and Development Bank (TDB) has expanded trade finance support for small and medium enterprises (SMEs) and emerging corporates, particularly in high-growth industries like manufacturing and agribusiness. Furthermore, these institutions are increasingly tapping into the capital markets and crowding in local institutional investors to augment their financing capacity and expand their offerings.
By scaling these innovative financing mechanisms, Africa can overcome trade finance barriers, strengthen regional value chains, and drive industrial transformation—paving the way for a competitive and resilient export market.
Closing Africa’s $120 billion trade finance gap is not just an economic necessity but a strategic imperative for scaling industrialization, strengthening regional value chains, and expanding export markets. With 90% of Africa’s exports still dominated by raw materials, the continent must accelerate access to innovative financing mechanisms that enable businesses to add value, compete globally, and create sustainable jobs. Institutions like Afreximbank, AfDB, AFC, and TDB have already mobilized billions of dollars in trade-related financing, but greater collaboration with global investors is required to meet Africa’s growing capital needs.
Strengthening risk-sharing mechanisms, increasing blended finance solutions, and leveraging digital trade platforms will be critical in de-risking investments and ensuring African businesses can access the capital they need. By addressing these financing barriers, Africa can transition from being a supplier of raw materials to a leading producer of high-value goods, unlocking a new era of economic transformation and self-sufficiency.
