Africa’s $100 Billion Trade Finance Gap: Why Digital Rails, Not Just Digital Payments, May Be the Fix

What to Know: 

• PAC Research says Africa’s unmet trade finance demand is over $74bn and the gap could widen to $86.6bn–$102.6bn by 2027.
• Despite intra-African trade growing by over 5% to $213.8 billion, bank-intermediated trade finance has fallen from ~40% to ~23% today. In developed markets, that figure sits at 60–80%.
• Closing the gap relies on a combination of digital rails such as PAPSS and ADAPT’s blockchain framework for paperless trade document authentication.
• Stablecoins, which account for 43% of the continent’s crypto volume, could help address FX shortages that are worsening the trade finance gap.

Africa’s trade finance shortfall has crossed $100 billion, and a new policy brief from PAC Research argues that the fix is less about finding more money than about rebuilding the plumbing that moves it.

When businesses across Africa try to buy or sell goods across borders, they run into a massive, hidden barrier. It is not a lack of products or customers, but a lack of trade financing.

The brief titled “Financial Architecture, Digital Innovation, and Inclusive Growth” draws on African Development Bank and Afreximbank data to put unmet trade finance demand at $74 billion to almost $100 billion.  The AfDB warns that figure could widen to $86.6 billion–$102.6 billion by 2027 if geopolitical tensions persist. 

​This financing bottleneck comes at a frustrating moment. The African Continental Free Trade Area is picking up momentum. Merchandise trade grew 6.1% to roughly $1.5 trillion in 2025, helping to drive intra-African trade up by more than 5% to $213.8 billion. 

Why the Gap Exists: Banks Are Pulling Back

In developed economies, banks support between 60 per cent and 80 per cent of all trade by offering short-term loans, credit lines, and guarantees. In Africa, bank support for trade has plummeted from roughly 40 per cent a decade ago down to just 23 per cent today.

Banks are largely stepping back due to strict collateral requirements, high perceived risks, and a severe shortage of foreign currency. Between 2020 and 2024, 36 per cent of banks cited limited foreign exchange liquidity as their biggest growth hurdle. Between 2015 and 2019, that figure was estimated at 18%.

This creates a harsh ripple effect. More than a fifth of applications get rejected outright, and the African Development Bank estimates that 16.5% of businesses with legitimate needs don’t even apply, expecting rejection.

In countries like Malawi, foreign exchange shortages have at times made it difficult for local importers to secure bank credit for necessities such as fertiliser and medicine. A World Bank IDA-backed guarantee eventually unlocked bank credit for fertiliser and pharmaceutical imports that they couldn’t otherwise secure. 

The Digital Solution Stack: PAPSS and ADAPT

​Fixing a problem this large requires a combination of modern tools working together. PAC Research’s proposed fix is a stack, not a single tool. 

On the payment side, the Pan-African Payment and Settlement System, known as PAPSS, allows companies to pay for cross-border goods in their local currencies rather than relying on scarce US dollars. PAPSS addresses currency fragmentation and cross-border settlement friction.

On the documentation side, a newer initiative called ADAPT uses blockchain technology. ADAPT uses a shared digital ledger to digitise and authenticate official trade documents, such as invoices and shipping certificates.

This means customs officials and lenders in different countries can instantly verify that a paper document is genuine without manual re-checking. This addresses some of the perceived risk and trust issues banks might have. 

In Kenya, digitising trade paperwork cut manual validation work by up to 70 per cent, reduced document retrieval times from seven hours to thirty minutes, and saved exporters an estimated $400 per shipment per month. However, initiatives like ADAPT are still early-stage tools being rolled out gradually.

ADAPT’s pilot phase now spans Kenya, Morocco, and Nigeria, with plans to expand to additional AfCFTA states over the coming years.

​Unlocking Immediate Cash for Small Businesses: SMEs and Factoring

​While payment systems and digital documents build the foundation, most small exporters need immediate cash flow to survive. This is where a financial tool called factoring comes in. 

Rather than waiting 90 days for a buyer to pay an invoice, a business can sell the unpaid invoice to a financial provider at a small discount to get cash immediately.

PAC Research provides an example. A Durban textile manufacturer facing 90-day customer terms against pay-on-delivery suppliers partnered with a factoring company, began collecting 85% of invoice value within 48 hours of shipment, grew revenue 35% in a year, and added 50 jobs.

Legislative reforms, such as Nigeria’s Factoring Law, are now helping make this legal framework safer and more accessible across Africa.

Could Digital Assets Play a Role in Closing that Gap? 

While the PAC Research report thoroughly maps out bank reforms, paperless trade, and factoring, it overlooks one of the most popular tools currently used by African businesses: stablecoins. Stablecoins are already being used by African businesses to mitigate FX shortages, one of the expanding problems as cited in the brief. 

​According to data from Yellowcard, stablecoins account for roughly 43 per cent of all cryptocurrency transaction volume in Sub-Saharan Africa.

In countries such as Nigeria, South Africa, and Ethiopia, small companies are using them as practical tools to navigate local FX shortages.

​If foreign exchange scarcity is one of the main drivers of Africa’s trade finance gap, then dollar-pegged settlement rails are directly addressing the problem right now. A settlement rail that doesn’t require pre-funded correspondent banking relationships is arguably as relevant to closing the financing gap as PAPSS.

Tech veteran Stafford Masie recently argued that Africa’s inflated cost of capital is largely a symptom of legacy banking friction and artificial currency barriers. The cost of capital also contributes to the problem with trade financing. 

In his view, open, borderless networks like Bitcoin can lower borrowing costs by removing costly intermediaries and providing neutral settlement infrastructure. 

Stablecoins and digital assets do not solve every issue. They do not verify trade documents the way ADAPT does, and they face regulatory uncertainty in several countries. But omitting them from policy discussions leaves a major gap in understanding how African trade is actually being funded on the ground today.

Looking Ahead

PAC Research also points out that free movement of people, not just goods, is an economic precondition for trade integration. Closing Africa’s $100 billion financing gap will not happen through a single technological breakthrough.

ADAPT’s Kenya-Morocco-Nigeria pilot results, whether regulators in Nigeria, South Africa, and Kenya move forward with stablecoin frameworks, whether factoring reform spreads beyond Nigeria, and the AfDB’s 2027 gap forecast are all worth watching. 

The trade finance conversation is still framed mainly around banking and payments infrastructure. Whether crypto-native settlement tools get folded into that conversation, rather than treated as a separate track, is worth watching as a story in its own right.