Afreximbank has published Volume 10, Issue 1 of its Trade and Development Finance Brief, examining structural vulnerabilities in Africa’s trade and investment landscape amid what the Cairo-headquartered multilateral development bank describes as an increasingly uncertain global environment.
The Brief argues that the continent’s export base remains heavily concentrated in raw materials, including agricultural commodities, oil, gas, and minerals, while imports skew sharply toward manufactured goods and machinery. According to the Brief, this configuration leaves many African economies exposed to commodity price volatility, geopolitical disruption, and global supply chain shocks, conditions the bank says have intensified since 2022.
The analysis positions the African Continental Free Trade Area (AfCFTA) as the primary structural response to these vulnerabilities, situating the trade agreement within a broader set of institutional mechanisms the bank frames as necessary to convert policy commitments into actual transaction flows.
What the Brief Identifies as Africa’s Structural Trade Vulnerabilities
The Brief attributes the continent’s exposure to a persistent imbalance between commodity-dependent exports and manufactured-goods imports. This structural configuration, according to Afreximbank, has left African economies more vulnerable to external shocks since 2022, spanning commodity price swings, geopolitical disruption, and supply chain instability.
How AfCFTA Is Positioned as the Structural Fix
The Brief projects that intra-African exports could rise by more than 20 percent within a decade as AfCFTA implementation advances, citing the agreement’s potential to integrate fragmented markets, expand industrial output, and strengthen regional value chains. Alongside the African Union’s Agenda 2063 framework, AfCFTA is presented as a practical mechanism for reducing the continent’s dependence on unfavourable terms of trade.
Dr. Yemi Kale, Afreximbank’s group chief economist and managing director of research, said the Brief points to a cluster of Afreximbank initiatives — including the Intra-African Trade Fair, the Pan-African Payment and Settlement System, the AfCFTA Adjustment Fund, the Border Markets Initiative, and the Collaborative Transit Guarantee Scheme — as part of the wider effort to strengthen Africa’s trade and investment ecosystem.
Key Enabling Infrastructure Cited in the Brief
Afreximbank identifies its own initiatives as forming part of the enablement layer required to translate AfCFTA into practice. These include the Pan-African Payment and Settlement System (PAPSS), adopted by the African Union as the payment platform underpinning AfCFTA; the $10 billion AfCFTA Adjustment Fund; the Intra-African Trade Fair; the Border Markets Initiative; and the Collaborative Transit Guarantee Scheme. Collectively, these represent the bank’s operational premise that institutional infrastructure, rather than policy aspiration alone, determines whether a trade agreement generates measurable transaction activity.
Beyond the trade agreement itself, the Brief identifies five enabling conditions it says require coordinated action: trade-enabling infrastructure spanning energy, transport, ports, and logistics; regulatory coherence; institutional strengthening; SME access to finance; and digital financial technologies. The Brief notes that fintech is contributing to growth in domestic investment across African economies, indicating that mobile payments, digital lending platforms, and cross-border settlement systems are being assessed as industrial-policy inputs rather than solely as consumer products.
Costs and Investment Distribution Implications
The investment picture described in the Brief is uneven. Foreign direct investment continues to outpace domestic capital formation across the continent, and FDI flows themselves are unevenly distributed, with Eastern and Southern Africa attracting a disproportionately larger share relative to Western and Central Africa. This distribution pattern has implications for how evenly AfCFTA-driven trade growth might be realised across different African subregions.
PAPSS and the Trade Finance Gap
Among the initiatives cited, PAPSS carries particular relevance for the payments and fintech sector. The system is designed to enable cross-border payments in local African currencies, bypassing the US dollar correspondent banking chain that currently adds cost and settlement friction to intra-African trade. Several African central banks have joined the system, and its governance sits with the African Union, giving it a multilateral standing that commercial payment networks do not have.
The Brief’s proposals also intersect with a well-documented financing shortfall. Estimates have consistently placed Africa’s annual trade finance gap at between $80 billion and $120 billion, attributed to correspondent banking retrenchment, high collateral requirements, and thin credit histories among smaller exporters.
Risks and Limitations
The Brief’s projected 20 percent rise in intra-African exports is presented as a decade-long outcome contingent on AfCFTA implementation proceeding as envisioned; it is not a guaranteed trajectory, and the Brief does not specify the assumptions underlying the projection. Progress also depends on narrowing the $80–120 billion trade finance gap, a structural constraint the Brief acknowledges rather than resolves through the initiatives it cites. Additionally, the uneven distribution of foreign direct investment across African subregions suggests that gains from AfCFTA implementation may not be evenly distributed across the continent absent further intervention.
Outlook
Afreximbank reported total assets and contingencies exceeding $48.5 billion at the end of December 2025, which the bank presents as balance-sheet capacity to support the commitments outlined in the Brief. Whether AfCFTA implementation, PAPSS adoption, and the accompanying enabling initiatives translate the Brief’s projections into measurable trade volume growth will depend on execution across the five enabling conditions identified, rather than on the framework alone.
Conclusion
Afreximbank’s Trade and Development Finance Brief positions AfCFTA as central to reducing Africa’s structural trade vulnerabilities, backed by a cluster of bank-led infrastructure initiatives including PAPSS and the AfCFTA Adjustment Fund. The bank’s own financing capacity and the persistent $80–120 billion trade finance gap remain material factors in determining whether the Brief’s decade-long projections are realised.
