African Businesses to Trade Across Borders, Banks Face Their Own Financing Constraints: Analysis
A new African Development Bank–Mashreq agreement could help ease trade-financing constraints for African businesses by reducing payment risks for eligible cross-border transactions.
African businesses seeking to expand into regional markets face a financing problem that extends beyond their ability to obtain loans. Banks also encounter constraints in providing the credit and payment guarantees needed to move goods across borders, leaving a substantial portion of the continent’s trade-finance demand unmet.
The 2026 PAFTRAC Africa CEO Trade Survey found that 57% of surveyed business executives considered access to trade finance for cross-border transactions difficult or very difficult. Separately, the African Development Bank estimated that unmet demand for trade finance across Africa reached between $74 billion and $92 billion in 2024.
The figures come from different research, but together they highlight a challenge for businesses attempting to turn regional trade opportunities into completed transactions.
Banks face their own financing constraints
Foreign-exchange liquidity is one of the difficulties affecting African banks’ ability to support international trade. According to the African Development Bank’s 2025 Trade Finance Report, 36% of surveyed banks identified limited foreign-exchange liquidity as their primary constraint on trade-finance growth during 2020–2024, compared with 18% during 2015–2019.
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This matters because cross-border transactions often require payments in currencies different from those earned by the businesses involved. Banks need access to those currencies and reliable international banking relationships to settle payments and support customers’ transactions.
The development bank also found that commercial banks intermediated an average of 23% of Africa’s total trade during 2020–2024, down from 40% during 2011–2019. This measures banks’ role in facilitating trade.
For businesses, limited financing can affect the ability to pay overseas suppliers, purchase imported production materials or fulfil export orders before customers make payment. Smaller firms may have fewer alternatives when conventional bank facilities are unavailable or too expensive.
A new guarantee agreement targets payment risk
On 13 October 2026, the African Development Bank Group announced an agreement with Dubai-headquartered Mashreq under its Trade Finance Transaction Guarantee Instrument.
Under the arrangement, the development bank can provide transaction-by-transaction guarantees covering up to 100% of the eligible non-payment risk assumed by Mashreq on qualifying trade-finance transactions originated by approved African issuing banks.
The mechanism is intended to help international confirming banks support transactions involving African banks by sharing specified payment risks. This can be important where an international bank is reluctant to extend or maintain trade-finance facilities without additional risk protection.
What needs to change for businesses?
Guarantees can address a particular obstacle in the financing chain, but they cannot resolve every difficulty involved in trading across African markets. Businesses still need to meet lenders’ requirements, while currency availability, transport costs, customs procedures and border delays can affect whether transactions remain commercially viable.
The key test for new trade-finance initiatives is therefore their practical effect: whether participating banks support more transactions, whether smaller companies gain access to suitable facilities and whether businesses can complete orders on commercially workable terms.
Africa’s trade-finance challenge is not simply about encouraging banks to lend more. It is also about making cross-border transactions sufficiently financeable for local and international financial institutions to support them. The African Development Bank–Mashreq agreement provides one mechanism for sharing payment risk, but evidence of actual financing and completed transactions will be needed to establish its impact.
