Limited access to finance continues to hinder the growth and competitiveness of small and medium-sized enterprises (SMEs) across Africa. Supply chain finance (SCF) — which includes both traditional trade credit and newer, technology-driven financial products—offers a promising solution to ease liquidity constraints, improve working capital cycles, and strengthen regional trade integration. However, despite an estimated SCF market size exceeding $60 billion, only 7 - 25% of the demand is currently met, as most financial institutions prioritize global trade over intra-African supply chains.
This report provides a comprehensive analysis of SCF patterns, drivers, and opportunities in African markets. We utilize recent World Bank enterprise survey data spanning 31 countries (2020–2024) and firm-level financial data from South African listed companies.
The analysis differentiates between direct trade credit—the most common and measurable form of SCF—and intermediated SCF solutions, such as factoring and payables finance.
Key findings include:
- Trade integration drives usage: Firms engaged in intra-African trade show significantly higher usage of trade credit compared to those exporting beyond the continent. This highlights the critical role of regional proximity, trust, and network-based enforcement mechanisms.
- Firm characteristics shape access to supply chain finance: Female-owned firms, companies with experienced managers, and businesses that import goods or materials are more likely to access supplier credit. Notably, firm size and foreign ownership show no statistical significance once other factors are controlled for.
- Supply chain finance works alongside formal banking: Firms with access to bank credit are 9.5 percentage points more likely to use trade credit, indicating a complementary relationship between these financing channels rather than a substitutionary one.
- Sector-specific patterns emerge: The construction, retail, pharmaceuticals, and manufacturing sectors lead in trade credit reliance, particularly where extended working capital cycles or government contracts create specific financing needs.
The report examines Africa's evolving SCF landscape, including fintech platforms, blockchain applications, and digital payment systems such as the Pan-African Payments and Settlement System (PAPSS).
We identify industrial parks and special economic zones as prime opportunities for scaling SCF solutions by leveraging shared infrastructure and governance frameworks.
To unlock the full potential of supply chain finance in Africa, the report recommends:
- Expanding digital SCF platforms for SMEs through strategic fintech partnerships.
- Strengthening legal and regulatory frameworks to support receivables financing and enforce payment obligations.
- Leveraging regional integration and infrastructure (e.g., AfCFTA, PAPSS) to facilitate cross-border SCF.
- Promoting gender-inclusive SCF access and raising awareness among women-led enterprises.
- Building capacity within banks and SMEs to understand and adopt SCF tools.
By addressing these gaps, SCF can become a critical enabler of inclusive growth, competitiveness, and regional trade resilience across African economies.