The persistence of this ‘missing middle’ reflects a deeper reality about trade finance itself. While trade instruments are often perceived as relatively low risk, because they are linked to underlying commercial transactions, banks still depend on a high degree of predictability around cashflows, documentation and counterparties. Where those conditions weaken, trade finance quickly becomes harder to scale sustainably.
“The most common barrier preventing mid-sized exporters and importers from becoming bankable counterparties is not ambition or opportunity; rather, it is risk visibility and predictability,” says Islam Zekry, Group Chief Finance and Operation Officer and Executive Board Member at Commercial International Bank (CIB).
This helps explain why access to trade finance remains concentrated even in markets where trade activity is growing. According to the Afreximbank African Trade Report 2025, Africa’s merchandise trade considerably outpaced global merchandise trade growth in 2024, supported by rising regional integration under AfCFTA and stronger manufacturing and distribution flows across several corridors. Yet the trade finance gap across Africa is estimated at $100 million annually. With SMEs making up 80%-90% of businesses on the continent, this persistent gap is severely hampering their capacity to engage in regional trade.
For banks, the issue is not simply liquidity availability. Rather, it is the difficulty of extending risk appetite beyond counterparties where repayment capacity, documentation quality and commercial enforceability are already well understood.
Entrenched advantage
Large corporates typically possess several structural advantages. Financial reporting is generally more robust and audited to international standards, while revenue streams are usually more diversified. They also tend to be internationally recognised and easier to assess from a compliance and credit perspective. Operationally, transactions are less likely to encounter documentary discrepancies that can delay settlement or increase execution risk.
By contrast, many mid-sized firms operate within fragmented supply chains where visibility deteriorates rapidly beyond the immediate borrower. Working capital cycles are often less predictable, and supplier-buyer relationships may be informal or concentrated around a small number of counterparties.
This creates a more complex form of risk than headline trade volumes alone might suggest. Repayment risk in trade finance is rarely linked solely to the borrower itself. It is shaped by the resilience of the wider commercial ecosystem surrounding a transaction.
Documentation, visibility and concentration risk
Documentation quality remains one of the clearest examples of this operational challenge. Trade finance depends heavily on precision, with letters of credit, guarantees and documentary collections all reliant on accurate and consistent paperwork. Even relatively minor discrepancies can create material friction.
“At CIB, scaling trade finance requires balancing inclusion with concentration discipline,” says Zekry. “In practice, documentation inconsistencies remain among the most frequent operational risks when scaling access.”
Across many African trade corridors, incomplete bills of lading, invoice mismatches and weak contractual documentation continue to contribute to delayed payments and transaction rejection rates. These problems can quickly become liquidity issues for smaller firms operating with limited working capital buffers.
Counterparty visibility presents another structural constraint. In developed markets, lenders often benefit from deeper credit bureau coverage, more transparent corporate disclosure and stronger legal enforcement mechanisms. Across much of Africa, banks frequently operate with more fragmented information environments. Assessing the ultimate obligor behind a transaction – particularly across borders – can therefore be difficult.
This challenge becomes even more pronounced when viewed through the lens of portfolio construction. Trade finance portfolios are not built transaction by transaction in isolation. Banks must also manage sectoral concentration, single-obligor limits and correlated exposure risks across interconnected value chains.
In sectors such as commodities, manufacturing inputs or distribution, financing multiple mid-sized firms operating within the same ecosystem can unintentionally amplify concentration risk. A disruption affecting one segment of the chain – whether currency volatility, delayed shipments or downstream payment stress – can rapidly transmit pressure across multiple borrowers simultaneously.
Egypt’s real economy illustrates the challenge
Egypt’s manufacturing sector illustrates many of these tensions clearly. Smaller manufacturers often remain heavily dependent on imported raw materials and intermediate goods, exposing them to foreign exchange volatility and supply chain disruptions. Longer working capital cycles further complicate repayment predictability, particularly where firms lack sophisticated hedging frameworks.
Agribusiness presents a different but equally complex risk profile. The sector in Egypt offers strong long-term growth potential, yet credit assessment remains complicated by weather volatility, commodity price fluctuations, fragmented land ownership and limited insurance penetration. Informal aggregation models can also reduce traceability and weaken enforceability across supply chains.
Distribution businesses meanwhile often generate strong transaction volumes but operate on thin margins and relatively shallow balance sheets. Liquidity stress can move quickly through these ecosystems when downstream payments are delayed, particularly where receivables management and supply chain finance frameworks remain underdeveloped.
From CIB’s standpoint, several approaches are critical to sustainably broadening trade finance access. “These include strengthening financial transparency to improve clients’ report standards and governance; leveraging structured instruments including supply-chain finance, risk-sharing arrangements and partial guarantees; and developing a deeper understanding of entire value chains rather than individual counterparties in isolation,” says Zekry.
Similar dynamics are visible across African trade corridors more broadly – from agricultural exporters in East Africa to commodity-linked supply chains in West Africa.
Scaling trade finance sustainably
This helps explain why expanding access sustainably requires more than simply increasing liquidity or digitising trade processes. The core challenge is improving the overall legibility and resilience of commercial ecosystems themselves.
Stronger financial reporting standards, more reliable trade documentation, deeper insurance penetration and broader adoption of structured supply chain finance frameworks can all improve banks’ ability to assess and distribute risk. Risk-sharing arrangements and guarantee structures also remain important in helping banks extend capacity beyond their most established counterparties.
As intra-Africa trade volumes grow under AfCFTA, the institutions most capable of broadening access sustainably are likely to be those that can improve transparency and risk visibility across entire value chains.
