Africa needs new tools to fund intra-south trade – Afreximbank president

Benedict Oramah, president of African Export-Import Bank (Afreximbank), has called for a fundamental rethink of trade finance structures to keep pace with the rapid growth of South-South and intra-African trade.

According to him, traditional trade finance models are becoming increasingly outdated and must be retooled to align with current realities.

Speaking at the launch of his new book, ‘The Foundations and Evolutions of Structured Trade Finance,’ on the sidelines of Afreximbank’s 32nd Annual Meeting holding in Abuja, Oramah reflected on how Africa’s trade landscape has evolved over three decades and what that means for financing.

“When I joined Afreximbank in 1994, the world economy was still grappling with a sovereign debt crisis, and structured trade finance was just beginning to emerge as a tool for financing trade in challenging markets,” he said.

At the time, more than 70 percent of Africa’s trade was with advanced economies in Europe and North America. Structured trade finance was designed to mitigate the high country risk associated with African markets by transferring that risk to buyers in more creditworthy jurisdictions.

“Businesses preferred extra-African trade to intra-African trade, sometimes because financing was easier for the former,” Oramah said.

He emphasised that the era is rapidly fading, as trade between Africa and other developing countries has grown from just 23% of total trade in 1995 to an estimated 68% in 2024.

Meanwhile, intra-African trade, currently at 15% to 17% is projected to double over the next decade as the African Continental Free Trade Area (AfCFTA) is fully implemented.

Read also: Africa’s trade, growth outlook positive despite global headwinds – Afreximbank

“This shift raises important questions about the relevance of traditional structured trade finance models in financing South-South trade,” he said. “Specifically, how will lenders transfer payment risks associated with trade amongst developing countries?”

Oramah pointed to several other structural shifts that are reshaping Africa’s financing needs, including the discovery of new oil and gas reserves across the continent, the rise of non-traditional exporters, and the return of manufacturing are all transforming the continent’s economic profile.
“With the rise of manufacturing giants in Africa, opportunities for domestic and regional value chains are beginning to emerge, alongside the growth of SMEs,” he said.

He further noted that traditional trade finance structures, which are historically geared toward commodity exports must evolve to support these developments, including increased demand for reserve-based lending and financing for industrialisation.

His newly launched book, published by Globe Law and Business, builds on the first edition by incorporating recent trends such as regulatory changes, shifting trade flows, and the need for inclusive financing tools that support Africa’s emerging sectors.

“This book was written to ensure that through innovative financing structures, Africa can maintain access to international trade finance despite trading among themselves,” Oramah told the audience.

Oramah credited the book to his 32 years of experience in trade finance, including his early years at the Nigerian Export-Import Bank (NEXIM).

He acknowledged the contributions of former Afreximbank presidents, colleagues, researchers, and his family.

“To my wife and family, I say we have collectively delivered,” he said, noting the long hours and personal time sacrificed in writing the book.

The bank, under his leadership, has been at the forefront of efforts to modernise Africa’s trade infrastructure, including the launch of the Pan-African Payment and Settlement System (PAPSS), which enables cross-border trade in local currencies.

Oramah’s reiterated that Africa must adapt its financial architecture to match its new trade reality, ensuring that it is increasingly driven by internal linkages and partnerships with the Global South.

According to him, “…the continent is steadily reversing the course of de-industrialisation. Traditional trade finance structures will require a rethink.”