If one were to speak to African suppliers who trade across borders, many would say that doing business within the continent can feel riskier than exporting beyond it. Especially for small and medium-sized enterprises (SMEs), information on counterparties is not always easy to obtain, regional currencies can be volatile and difficult to hedge, forward markets offer little depth and access to affordable finance is often limited at precisely the moment it is needed most. Financial institutions also sometimes price regional trade more cautiously than comparable transactions further afield, even though the markets sit closer together. Despite the clear opportunity to finance these supply chains, only a portion of the demand for capital is met.
In practical terms, this puts pressure on the supply chain. Take an everyday transaction: an order comes in and raw materials, labour, production and transport all have to be funded before a single payment is received. By the time goods cross a border, weeks may already have passed and settlement can take longer still where processes are uneven or payment terms extend across jurisdictions. If trade credit, supplier finance or receivables discounting are not readily available, even modest delays begin to strain the balance sheet.
This is why easier access to supply chain finance (SCF) is so important to expanding Africa’s regional trade agenda.
However, despite an estimated SCF market on the continent exceeding $60 billion (about 2% of global volume), the United Nations Conference on Trade and Development (UNCTAD) suggests that only between 7% and 25% of demand is currently met and the African Export-Import Bank (Afreximbank) reports that just 18% of African banks’ SCF portfolios are directed towards intra-African trade.
When working capital is scarce and currency risk sits with the supplier, cross-border trade becomes a balance-sheet decision rather than a market opportunity. Smaller businesses begin to limit their exposure, prioritising domestic transactions where settlement is more predictable and informal credit can bridge short-term gaps and pricing defensively where exchange-rate volatility threatens already thin margins. Over time, the result is a narrowing of participation, with only the most capitalised firms able to operate comfortably across borders.
There are practical solutions that can be implemented in the near term to make SCF more bankable. Regional trade becomes expensive to finance when too much of the transaction sits in separate systems that do not talk to each other. A buyer may know a supplier well and a supplier may trust a buyer but once a bank or insurer steps in, it often has to piece together the transaction from scattered documents and inconsistent settlement records. The cost of that reconstruction shows up in pricing.
This is why it is important to develop stronger regional digital supply chain platforms. These are shared tools that bring buyers, suppliers, logistics providers and financiers onto the same transactional record, linking confirmed orders, shipment updates and payment data in a way that can be accessed across borders. They reduce the need for each institution to independently reconstruct a deal from fragments and instead allow financing decisions to rest on a verified record of what has actually been traded and settled.
But the effectiveness of regional platforms ultimately depends on the quality of the data flowing into them. UNCTAD research finds that businesses that use digital technologies such as enterprise resource planning (ERP) systems, electronic invoicing and integrated data platforms are better positioned to access SCF because they generate more consistent and transparent transaction records.
African banks have also developed in-house digital SCF portals that allow their corporate clients to onboard suppliers and manage invoice finance programmes online. By automating processes that were previously manual and paper-heavy, these platforms have reduced administrative costs and made it commercially viable to include smaller suppliers who would once have been too expensive to serve.
The way risk is measured also needs to change. Much of trade-linked lending on the continent still leans heavily on fixed security, property and guarantees — assets that smaller firms either do not have or cannot pledge without choking their own operations. Transaction data provides a different basis for judgment: repeated orders, buyer payment behaviour, settlement timing, dispute frequency — the ordinary signals of whether a business performs. When lenders can rely on that record, funding can be structured around what the firm does rather than what it owns. That is how SCF moves from being an instrument used by a few large anchor programmes to something that changes who can participate in regional trade.
When suppliers can access working capital against confirmed trade flows, entire value chains become more bankable, payment cycles become more predictable and cross-border relationships become more durable because financing is tied directly to commercial activity rather than to fixed assets.
If the African Continental Free Trade Area (AfCFTA) is to translate into real commercial activity, this financial architecture has to grow with it. Trade agreements can open corridors, but it is the movement of working capital within value chains that determines whether those corridors carry consistent trade or sit largely idle.
Abdul Yassim is the head of Trade and Working Capital South Africa and Mosa Tshabalala is the head of Institutional Trade and DSI Sales, both at Absa CIB
Regional trade becomes expensive to finance when too much of the transaction sits in separate systems that do not talk to each other
