It is estimated that one in every six African exporters fails to meet their export sales targets due to a lack of funding for the input, production and export stages of their operating life cycle.
The result culminates in a loss of about $50,000 per trade or per transaction, per small and medium-sized enterprise (SME) per year, according to the African Development Bank.
This inadequate financial support ultimately culminates in a trade finance gap of more than $8bn that the continent now faces, the bulk of which affects SMEs the most.
The establishment of the African Continental Free Trade Area (AfCFTA) plans to accelerate intra-African trade and boost Africa’s trading position in the global market by creating the world’s largest free trade area.
In addition, more developmental financial institutions working on the continent have developed and introduced supplementary trade and export finance programmes, on both a funded and unfunded basis.
Partnerships and collaboration between commercial banks and developmental financial institutions offers a strong prospect of bridging the trade finance gap and supporting SMEs and local corporates alike.
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