Mobile technology and partnerships are extending banks’ reach and addressing distribution gaps. Yet banks and their partners must ensure that inclusion is responsible and commercially sustainable, while adapting their models to the characteristics of each market.
African ecosystems
At Egypt’s Commercial International Bank (CIB), ecosystem banking is focused on building a connected platform for SMEs rather than offering standalone financial products. “In practice, this translates into holistic financial services, where payments, lending, trade finance, and digital tools are bundled together,” says Islam Zekry, group chief finance and operations officer and executive board member at CIB.
High collateral requirements often exclude African MSMEs from formal finance, while informal business practices and limited records compound the perceived credit risk.
A growing digital footprint in some African economies is making more MSMEs assessable as borrowers, supporting the growth of cashflow-based lending in markets such as Nigeria, Kenya and South Africa. But digital connectivity and financial inclusion rates vary widely, so serving MSMEs also requires channels beyond mobile applications and credit models based on digital transactions.
Banks now position themselves “within the SME’s actual operating rhythm; its invoicing, its inventory management, and the day-to-day cash movements that ultimately determine a business’s viability,” says Kafui Bimpe, head of SME business across Access Bank’s African subsidiaries.
Physical distribution networks remain important in markets with shallower digital penetration. Banks are also working with fintechs, telecommunications companies and other service providers to formalise and digitise business processes and improve MSMEs’ access to vehicles, equipment, logistics support and human resources.
Through these ecosystems, banks are meeting customers where they are, “moving beyond the traditional approach of providing MSMEs with standalone products to supporting the broader journey of running and growing a business,” says Abiodun Olubitan, group head of SME banking at Access Bank.
Sharing risk
Partnerships with development finance institutions can help ecosystem models scale, enabling banks to share risk and broaden MSMEs’ access to business support, market opportunities and growth capital.
Such partnerships can also help banks diversify credit portfolios and offer MSMEs finance on longer, more affordable terms than balance sheets alone allow. That, Olubitan says, provides “a good example of the way partnerships can create value for both lenders and SMEs.”
Partnership structures differ by country. South Africa is mobilising its deep capital markets to expand SME credit. In July 2026, the African Development Bank invested ZAR5.4bn in a subordinated first loss after capital (Flac) instrument issued by Standard Bank Group. The deal was Africa’s first development-finance-institution-supported social Flac instrument listed on the Johannesburg Stock Exchange, with all proceeds earmarked for SME financing, including women-led businesses.
Risk-sharing structures can also help banks serve MSMEs in markets with lower financial inclusion and shallower digital coverage. In May 2025, the African Export-Import Bank signed a €15 million factoring line of credit with Banque Postale du Congo to support SMEs in the Republic of Congo and expand the bank’s cross-border factoring activities.
Macro pressures and trade opportunities
Africa’s trade finance gap is estimated by the African Development Bank at $100bn-$120bn annually, with SMEs bearing hardest hit by the shortfall.
Foreign exchange shortages and currency volatility constrain MSMEs’ ability to scale, grow and access vital inputs and lucrative international markets. The historical dominance of hard currency trade finance can add to those pressures. This decade, the COVID-19 pandemic, higher tariffs and energy shocks linked to conflicts in eastern Europe and the Middle East have compounded the challenge.
To help companies use the opportunities created by the African Continental Free Trade Area and the Pan-African Payment and Settlement System, banks are expanding local currency trade finance and cross-border payment options. These products can reduce currency mismatches and dependence on scarce hard currency, although they do not eliminate exchange rate risk.
Egypt is also seeking to strengthen its role as a trade hub, supported by the Suez Canal and its proximity to European, Middle Eastern and Asian markets. Banks, including CIB, are using partnerships and in-house platforms to help MSMEs navigate export requirements, logistics and payments, and enter new markets.
Rather than funding individual companies, some pan-African lenders, such as Equity Bank, are broadening ecosystems by financing upstream and downstream trade linkages. Meanwhile, targeted solutions are easing friction along supply chains. “For SMEs, the most profound challenge is often not demand, but the working capital needed to fulfil that demand,” says Collins Wanyonyi, director, SME banking at Equity Bank. “Import duty financing helps keep goods moving through ports, purchase order financing supports order fulfilment, and invoice discounting unlocks liquidity from receivables”.
Balancing risk and reach
Ecosystem banking will ultimately be judged on whether it can support sustainable MSME credit and growth without weakening banks’ underwriting standards and operational resilience.
Partnerships, apps and dedicated facilities enable banks to penetrate deeper into the MSME segment, but more complex ecosystems also introduce third-party, data governance, compliance and conduct risks. Robust due diligence, clear accountability, data safeguards and ongoing monitoring will be essential as banks expand these models.
“The key challenge is balancing innovation with control – ensuring partners align with compliance and sustainability standards while managing risks around data security, credit quality and operational reliability,” says Zekry.
That said, evidence suggests that prudent oversight is at the heart of ecosystem banking’s nascent momentum. And by maintaining emphasis on responsible inclusion, banks can profit from serving a vast, underserved market, simultaneously promoting economic dynamism and resilience throughout Africa.
