Afreximbank's 2025 African Trade Report shows considerable increase in intra-African trade

The African Export-Import Bank (Afreximbank) has released its 2025 African Trade Report, a flagship yearly publication of the Bank. The latest edition, titled "African Trade in a Changing Global Financial Architecture," underscores the significant transformation occurring within the global financial and trade landscape, offering an in-depth analysis of macroeconomic conditions, global and African trade developments, commodity market trends, shifts in the financial landscape, with future growth and trade prospects. Furthermore, it provides strategic insights on how Africa can navigate this period of structural change, characterized by geopolitical fragmentation, rising protectionism, volatile capital flows, and an increasing trend toward deglobalization.

A key challenge that African nations face which is highlighted in the report is the persistent trade finance gap, estimated at approximately US100 billion annually. This significant deficit hinders the growth of most African small and medium enterprises (SMEs), impeding their participation in regional and global value chains (on this subject, we recently published this post on our blog).

While Afreximbank disbursed over US17.5 billion in trade finance in 2024, a recent downgrade by Fitch could potentially increase the cost of trade finance in Africa, negatively impacting the Bank's ambitious plan to double intra-African trade financing to US$40 billion by 2026.

Other challenges identified include exchange rate volatility, macroeconomic instability, and regulatory fragmentation across various sectors. These issues are further compounded by sovereign debt vulnerabilities and infrastructure deficits.

Despite these challenges, the 2025 report presents positive developments. Africa's merchandise trade experienced a robust recovery in 2024, rebounding by 13.9 percent to US$1.5 trillion after a decline of approximately 5.4 percent in 2023. However, Africa's share of global exports remains minimal: 3.3 percent, a slight decrease from 3.5 percent in 2009. Significantly, intra-African trade demonstrated remarkable growth in 2024, increasing by 12.4 percent to reach US$220.3 billion, up from US196.04 billion in 2023 and US208.3 billion in 2022. This follows previous intra-African trade growth rates of 18.6 percent in 2022 and 3.2 percent in 2023. Major African economies such as Nigeria and Morocco were key drivers of this growth in 2024. South Africa maintained its position as the leading exporter to other African nations in 2024, particularly within Southern Africa, accounting for 19.1 percent of total intra-African trade, despite a slight decline from 20 percent in 2023. Consequently, the report indicates the Southern Africa region as the champion of intra-African trade, compared to other regions.

The extent to which the African Continental Free Trade Area (AfCFTA) has contributed to this increase remains unclear. Preferential AfCFTA trade operations are currently limited, and primarily associated with the Guided Trade Initiative. A recently published post-impact analysis of the Agreement suggests that while the AfCFTA has begun to stimulate intra-African trade, its immediate effects are still modest and uneven. The study concludes that realizing the full potential of the AfCFTA necessitates mitigating structural barriers, promoting equitable labor standards, and actively involving all stakeholders, particularly marginalized groups, in policy formulation and implementation: conditions that at present are not yet fully established.

Despite the observed growth, intra-African trade still accounts for only 14.4 percent of total African trade. The report emphasizes that this figure exclusively reflects formal trade activities, indirectly acknowledging that this figure does not account for the substantial volume of informal trade within the continent. The exclusion of this sector suggests that the actual volume of intra-African trade, if informal exchanges were included, would likely be significantly higher.