On the sidelines of GTR East Africa in Nairobi, GTR brought together leading voices from across the trade finance ecosystem for a discussion on the state of regional trade. Against a backdrop of shifting supply routes, evolving investor appetite and persistent infrastructure challenges, the group explored what it will take to turn ambition into action, from smarter financing structures and deeper collaboration to local production, digital innovation and a mindset shift that embraces African-made solutions.
Roundtable participants:
- Nick Kwolek, founder, Kulea
- Arnaud Levasseur, executive vice-president, global transaction banking – global trade solutions and director, trade services, MCB
- Patrick Makau, head of trade and working capital, East Africa, Standard Chartered
- Shannon Manders, editorial director, GTR (moderator)
- Phanice Mokua, head of trade, transaction banking, Stanbic Bank Kenya
- Fredrick Mutua, senior underwriter, African Trade & Investment Development Insurance (ATIDI)
- Duncan Onyango, CEO, Trade Catalyst Africa
- Paras Shah, managing partner, Kenya, Bowmans
- Freddie Tucker, investment director, British International Investment
GTR: How are intra-African trade flows evolving in East Africa, and what is driving or hindering greater cross-border integration in the region?
Mokua: To set the scene from a flows perspective, there has been a clear historical reliance on Kenya, mainly because of our port location, which also serves the region. But we’re now seeing countries shift away from that reliance. At last year’s GTR East Africa event, discussions had already begun about Uganda moving away from the Kenya procurement system, and it has since succeeded in working directly with Vitol to meet its oil needs. That said, countries in the region still rely on Kenya’s infrastructure. Uganda doesn’t have a pipeline or a common user facility like the Kenya Pipeline.
Oil is a major flow, making up about 25% of Kenya’s trade in any given month. With Uganda stepping back to independent sourcing, this has impacted export flows from this trade. However, the government’s response or intervention has helped ease pressure on the dollar, and we’re not seeing too much strain despite the loss.
There’s a focus on revamping trade flows to countries like Rwanda to fill that gap. The tea auction is still active, and while Kenya still holds a strong position, other markets are starting to push in, looking to gain more ground in tea.
In manufacturing, there are opportunities to develop policies to support growth in the sector. Naturally, our export share is slowly shrinking, and the region is looking for alternatives. That’s not good for us. A decline in real production results in rising unemployment, which impacts demand in consumption.
Makau: Let me take a step back. When we talk about the evolution of intra-African flows, I first ask, why are they evolving, or why do they need to evolve? Two things come to mind. On the negative side, there is economic uncertainty, trade wars and geopolitical tensions. On the positive side, this creates opportunities to shift supply chains and deepen regional integration. It also opens the door for partnerships under frameworks like the African Continental Free Trade Agreement (AfCFTA), which has moved from policy into implementation.
That is the context I use to think about what is driving this evolution and where the opportunities lie. Based on our internal research at the bank, we published a report called The Future of Trade, which looks at global trends. We also created a follow-up report, The Future of Trade: Africa Spotlight on the African Continental Free Trade Area.
From that, we see African exports growing from around US$640bn to US$1tn by 2035. Intra-African trade alone is expected to grow by about US$140bn in the same period.
So when I speak with clients, I ask, how are you tracking these corridors? That is where the opportunity lies. Intra-East African trade is set to increase by 15.1% to US$5.3bn. Much of that activity happens in the SME space, which might not be fully reflected in the corporate or multinational data, but the payment volumes show it clearly.
We support both inbound multinationals and large regional businesses looking to expand. I have clients entering DRC, Ghana, Nigeria and South Africa. They rely on our expertise to do so. That is how I see intra-African trade – as an opportunity. I look at the numbers, and then I put the opportunity in front of the client and ask, how can you leverage this for your business?
Shah: Those numbers sound impressive on their own, but in a global context, they are probably quite small. I do not have the exact figures, but I would assume that US$1tn is still a tiny share of global trade. And that is the real challenge for Africa. The AfCFTA and other initiatives are important, but we sometimes get overly proud of relatively minor achievements. In Kenya especially, we celebrate small wins that, in the bigger picture, are not that significant. Meanwhile, the real opportunity is much larger.
On the manufacturing side, the issue does not always lie with borders or regional frameworks. In fact, I think the East African Community is one of the most successful trading blocs, not just in Africa but globally. The real problem is internal. We create barriers for our own manufacturers, even for domestic trade, let alone exports. So while we often point to regional challenges, the biggest issues start within our own countries.
Tanzania, for example, is putting up barriers overnight, which adds to the complexity. But ultimately, we are missing the mark – both here and across other African nations. That collective US$1tn could easily be US$10tn if we aligned our efforts.
Onyango: I want to discuss corridors and country performance. The corridor model assumes an access point and a destination, so both countries’ economic strength matters. However, infrastructure in between is just as important, especially for input-driven flows.
There is a compelling case for prioritising Central Africa by improving connectivity grounded in regional productivity and strong neighbourly ties. This would create a trade architecture that supports growth.
The Northern Corridor, which includes Kenya, is a good example of a well-performing route. The Central Corridor with Tanzania and Rwanda is progressing, and the Lagos–Abidjan Corridor in West Africa is another key route.
But the real opportunity lies in the centre, in countries like Zambia. If we can build the right infrastructure around these hubs and connect them outward, we could significantly scale trade. That starts with enabling basic trade – right now, even moving maize out of Zambia remains a challenge.
Kwolek: From an investment perspective, people have finally woken up to East Africa. They see the population growth. Right now, there are really only two major pockets of growth: East Africa and Nigeria. South Africa is flat, and West Africa is growing slowly. But if you take East Africa, including parts of Central Africa, we’re at 515 million people today, and heading to about 1.4 billion by the end of the century. It’s going to be a major growth engine, and people are starting to see that.
Take sugar, for example. Southern Africa used to be the continent’s main production belt, but now investment is shifting here. We’re seeing multi-billion-dollar projects in Kenya, Tanzania and Uganda, and sugar flows are becoming more intra-regional.
The challenge is financing. Most of the infrastructure projects aren’t being financed locally because the cost of finance is too high. So companies are going to London, Geneva or Zurich to raise funds. That’s a big issue for local banks. We keep missing out; so much of this money ends up leaving the continent, and that’s a real loss.
GTR: What role do financial institutions need to play in reshaping the narrative and supporting Africa’s trade and industrial transformation?
Levasseur: Just to build on what others have said, I think we need a more positive narrative. Africa accounts for only 2.8% of global trade, yet 20% of the world’s population lives there. In 25 years, one in four people will be African. So the opportunity is huge. The demand is coming, and that demand will drive supply, infrastructure and investment.
From a banking perspective, a negative narrative makes it harder to get internal approvals. If we shift the focus to the real potential of African businesses – long-term, cash-flow-generating projects – banks will be more willing to step in. These are viable businesses that deserve investment.
Of course, the size of some deals is beyond the scope of a single bank. This is where collaboration comes in, whether it’s with DFIs or other partners. Working together also builds local competence, which we can’t get by relying solely on international players. This year has shown us how quickly external support can be pulled away.
If we build local manufacturing and export from here, it will lower costs and strengthen supply chains, but we have to commit to doing it ourselves.
Yes, finance is difficult. There are real risks, and as banks we must assess them. But we also need regulators to support us. Credit agencies and others often assess Africa with a narrow, external lens. I tell credit insurers they need to visit, meet the companies, and see the reality on the ground, feel the energy and the entrepreneurial spirit to move in the right direction.
Banks are already stepping up. There’s a huge gap left by international banks, and while we can’t fill it overnight, we are moving in the right direction. Sharing information is key. Understanding where the real opportunities are and where to be cautious. That’s how we move forward.
Makau: When it comes to financing, it’s not just about banks. There’s venture capital, bank financing, DFI support and even basic things like governments paying SMEs on time. DFIs also play a role through risk participation. Banks, of course, have to manage risk carefully – we won’t take risks we don’t understand.
Each bank has its own risk appetite.
That’s why this conversation needs to be broader. It’s not just about banks, but about the full financial ecosystem: fintechs, trade intermediaries, DFIs and others all have a role to play.
Mutua: There’s a real opportunity to move away from traditional financing models, especially in commodities. Instead of relying heavily on collateral, banks can look at more structured solutions, like financing based on receivables and supply chain flows. For example, structuring deals around the offtaker, not just the trader, where receivables provide more certainty.
We’ve seen greater appreciation among banks and other lenders for risk-sharing structures, especially with DFIs like ATIDI. In response, we’ve created portfolio risk-sharing arrangements, targeting sectors banks typically avoid, like SMEs. We agree on clear eligibility criteria and share the risk, which gives banks more confidence to lend into these areas.
There’s also progress on the regulatory front. Some central banks are recognising the role of trade credit insurance in capital relief under Basel regulations.
This allows banks to significantly increase their exposure to traders, where previously limits were tight.
Another challenge is dollar-based cross-border payments, which strain both banks and traders. Some DFIs are addressing this. For example, the African Export-Import Bank is developing a Pan-African Payment and Settlement System. If a trader in Kenya is exporting to Rwanda, they should be able to transact in local currencies rather than defaulting to the dollar. These are the kinds of solutions that risk-sharing partners and DFIs are helping to drive.
GTR: We’ve long talked about the need for greater collaboration between commercial banks and DFIs. We hear about smart structures – first-loss funds, risk-sharing arrangements like the ones you mentioned, Fredrick. But why aren’t they working on a much greater scale? What’s holding this back?
Tucker: I think it’s important to remember that DFIs are motivated a bit differently. Yes, we have commercial goals, but we’re primarily focused on development: creating jobs, increasing climate-related investment and supporting underserved segments.
That difference actually allows us to partner well with the commercial sector. Where commercial banks reach their risk limits, we can step in. It’s crucial that DFIs continue to communicate our impact goals and how we can take different risks to support trade and development in Africa.
I agree with what others have said. Africa exports huge amounts of cash crops and minerals, much of which are processed abroad and sold back to us. We need to increase local value addition. DFIs can support this through both short and long-term financing. Most DFIs offer debt and equity, so there’s flexibility to meet different needs.
In trade specifically, structured finance for SMEs is still lacking across the continent. Corporates are well-served, and they’re important, but SMEs make up a large part of economies like Kenya’s. We need to structure financing that works for them, even if they don’t have the same level of collateral. DFIs can help banks take on more of that risk.
Levasseur: Another major issue is the shortage of talent with a ‘go-getter’ mindset. At MCB, we have ideas and we want to scale up, but we struggle to find talent in the trade finance sphere due to a lack of courses in trade finance. It’s not a subject that forms part of the curriculum, or even a career many young people aspire to. It’s a niche field that takes time to learn and even longer to master. Not everyone has the patience or passion to go the full depth. Yet I can assure you, the passion for trade around this table is undeniable.
It’s also a question of awareness, of knowing what our neighbours produce. Mauritius, for example, imports beef from Australia but not from Namibia, even though Namibia exports that same beef to Europe. It’s a mindset issue and a matter of personal change. We need to believe in – and consume – African products. Africa produces high-quality goods. That’s how we drive regional growth.
Makau: I’ll take the positive view. It’s working. First, as banks, we manage risk. So it’s critical to understand the risks and be able to clearly articulate them in a way that aligns with their purpose and philosophy.
Fifteen years ago, it was all about one-off deals – no real strategic intent or shared understanding. That’s changed. Now there’s more clarity, and with that comes capacity building and scalability.
There was also a misunderstanding of roles. Some clients and banks treated trade credit insurance like car insurance – if it goes bad, someone pays. But when things went wrong, insurers pulled back, reassessed and disappeared from the market for years. So we’ve learned the importance of knowing who plays what role, and over what time frame.
For us, it’s about two things. First, how to do more with clients. I’ll never show DFIs a deal I wouldn’t do myself – they rely on our due diligence and credibility. Second, we need to enhance returns. We’re regulated across multiple markets, each with its own metrics. So we have to balance doing right by our shareholders, meeting client needs and aligning with DFIs’ approach.
Shah: A couple of things. First, local currency funding is critical to ignite trade. DFIs and international banks are helpful, but when you ask for local currency, hedged and passed through to local banks, it’s rare.
Second, private credit in Kenya has dried up over the last few years. When the government offers 14 to 15% tax-free returns, banks naturally prefer lending to the state over lending to traders. That shift from private to public lending isn’t unique to Kenya; it’s across much of Africa.
Related to that is the broader issue of capital for SMEs and traders. It’s just not there, largely due to credit costs and the risk environment. And even when credit is available, the legal framework to structure and deploy facilities is painfully slow and expensive. Under the previous government, things improved a bit. But we’ve taken a step back, and today, putting together a US$50mn facility is still far too costly and time-consuming – especially in a business where speed is everything. We continue to be held back by our own inefficiencies.
GTR: On the other hand, where are we seeing real progress? Where are your collaborations delivering results, and can that be replicated?
Mokua: Structured trade has actually grown. There’s still a lot of reliance on balance sheet to lend to clients, but we’re seeing banks open up more. Yes, the cost of a structured facility is high because of legal fees, collateral managers and fragmented markets, but there’s a real push to explore off-balance-sheet solutions.
We do not discount the importance of balance sheet strength, but we need to explore structures to improve the risk profile to make the deal bankable. Can we bring in a DFI whose motivations are somewhat different from commercial banks? Can we stop trying to both lend and underwrite risk, but instead outsource that to insurance agencies to spread out the risk?
If I understand how the transaction unwinds and the cash flows involved, I can take a position – and then bring other players to participate in underwriting this risk. We should consider transitioning to more originate-to-distribute models, rather than originate-to-hold. That allows banks to stay closer to clients and unlock more business opportunities.
On trade more broadly, there’s now a greater realisation that trade is ultimately a lending product.
It’s no longer just about understanding letters of credit or guarantees. Practitioners are starting to see the need to understand a transaction end-to-end.
Levasseur: We see this a lot with African manufacturers importing from Asia. Unlike European suppliers, who often offer credit terms and ship goods without upfront payment, Asian suppliers usually require 30% to 50% down, then full payment before shipment. For African buyers, that means tying up capital early. When you add long lead times and high financing costs, funds are locked in well before production even starts.
One thing we’re working on is helping clients see the value in asking for credit – how to do it using tools like bank guarantees, letters of credit, or standby letters of credit. These unfunded instruments lower capital requirements, and from a bank’s perspective, funding a future asset gives us more comfort. But this only works when you understand the client’s supply chain: who they buy from, how they pay and what options are available.
At first, clients often push back – it’s too complicated or too much admin. But once they try it, even starting with just one letter of credit, and see how it lowers financing costs, they come around. It also opens up more capacity for them to produce and sell. When we go to our credit committee, we can show that the demand exists. If they can produce more, they can sell more.
Another example: we had a big project where funding it directly would’ve been expensive. Instead, we issued a bank guarantee in partnership with the insurance market and had the buyer raise funds externally. We secured the repayment. That structure lowered costs and unlocked alternative financing. It’s about being creative with instruments and structuring.
Yes, most of this is still done with large corporates. The challenge is SMEs, but we need to find ways to simplify and scale down these models for them too.
Start small, build confidence and plug them in.
GTR: It would be remiss to talk about trade in East Africa without touching on digital innovation. By the time this is published, TCA will have launched its platform, so tell us what you are working on and what role you see technology players taking on in this space?
Onyango: We are about to disburse our first funds after spending two years developing a digital marketplace focused on SMEs. From the start, we aligned with the Trade and Development Bank (TDB) on the core issue: how to deploy small-ticket, uncollateralised capital entirely digitally.
The first year was learning how to collaborate effectively. As a more agile player, we needed to prove ourselves. We funded the early-stage work, including the research, feasibility studies, investment case, and even the selection of fintechs that will serve as the last-mile link to SMEs.
Then came structuring. Our capital was somewhat concessionary, with a first-loss component. Mastercard provided additional funding: some into the credit pool and some into SME capacity building, which we regarded as essential. Without that, we risked creating low-quality products.
We also brought in partners like the Africa Guarantee Fund to provide further risk cover. The agreements are now signed, and the first disbursement is scheduled for June 1. We’re starting with US$20mn, intending to cycle that capital a few times and gauge performance.
If successful, we’ll expand – currently, we have engaged a consultant to scope new markets.
Interestingly, a large European DFI and a major Japanese bank have shown interest, not just in the economics, but in the structure itself. They are asking: ‘Who are the partners? How does the money flow? How is the risk shared? And what role do the fintechs play?’
We believe fintechs should own the know-your-customer and scoring processes. They are closest to the SMEs and understand them better than we do. Using their data, we can price the risk and use TDB’s treasury to offer competitive rates. It still feels somewhat clunky, but it’s working, and we’re excited to see where it goes.
GTR: Let’s end on a positive note. What are you most optimistic about – whether it’s your business, trade in East Africa, value addition or anything we haven’t covered yet?
Mutua: For me, it’s all about increasing collaboration. Everyone in the trade ecosystem has a role: banks focus on risk and financing, while DFIs bring a development lens and can help banks become more comfortable with tougher sectors.
Digitisation will be a game-changer. One of the biggest issues is around access to reliable information. If we can improve information flow, we unlock real value. The positive is that banks are investing, fintechs are stepping in, and partnerships are growing. Collaboration is key and it’s happening.
Tucker: We have not touched on it, but one exciting area is the rise of electric vehicles in East Africa. It is a really promising market in terms of financing imported batteries, supporting local assembly of electric motorbikes, cars and trucks, and then offering short-term asset finance for individuals to buy them. That entire trade and value chain is a major growth opportunity.
Onyango: To those seeking opportunities in Africa, we are ready, credible, knowledgeable and resourceful.
We can be your local partner and source of insight.
Mokua: We have barely scratched the surface in terms of opportunity. If we align our thinking – both capital holders and entrepreneurs – I really believe the sky’s the limit.
Kwolek: From a global trade perspective, there is a huge amount of interest in this space, continent-wide. The big trade houses are starting to take on more risk, extend credit lines and support African traders. That shift is real. You’re seeing the African trader taking the lead in African trade. It is happening, and it is great to see African solutions solving African problems.
Levasseur: For me, it is about keeping this conversation going. You can feel the alignment of purpose in the room, and we all have that strategic patience because we believe in the potential of our continent and our people.
Let’s make sustainability truly sustainable for Africa, focus on the ‘S’ in ESG, and keep pushing forward African trade with a digital lens.
Makau: For me, it is not one thing, it is the convergence of a few key factors. Helping clients understand what that US$1tn means, but more importantly, championing African solutions for Africa. That includes supplier finance, sustainability-linked trade to access markets where it’s now essential, and diversifying trade partners. And yes, digital trade. We need to remove the clunkiness, add efficiency and real value. It is time to move from policy to real action.
Shah: Three things. First, we did not touch on it much, but the AfCFTA is going to be critical. I am optimistic; it’s slow, but we will get there. Second, unified payment systems across countries are coming, and once in place, they will unlock a lot. And third, geopolitics. All the global shifts might actually benefit Africa. We have a competitive advantage, and we are already seeing increased interest from Chinese investors in manufacturing. So yes, some of the global turmoil may turn out to be a good thing for us.
