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Gwen Mwaba is director and global head of trade finance at the African Export-Import Bank (Afreximbank), where she has oversight of the origination, structuring, syndication and distribution of trade finance products and services.

In this GTR Trade Leaders Interview, Mwaba discusses emerging financing demands that Afreximbank is seeing across various sectors on the continent, and provides an update on a number of the bank’s initiatives aimed at supporting Africa’s trade and development needs.

The interview has been edited for length and clarity.

 

GTR: What new financing demands are you currently seeing at Afreximbank?

Mwaba: We’re seeing latent demand becoming more apparent, spurred by increased awareness of Afreximbank’s capabilities. This demand spans various sectors, particularly around intra-regional trade.

For example, we’re stimulating some new growth areas in the industrial park space. We recently signed a memorandum of understanding in Malawi, where we are working on an agri-park project geared towards exporting packaged agricultural commodities.

We’re also seeing substantial demand for the financing of fossil fuels. While transitioning to cleaner fuels is clearly a priority, many African countries are still discovering and relying on fossil fuel resources for industrialisation. Therefore, facilitating access to these resources is essential for their development. There is a lot of demand for financing structures related to reserve-based lending for crude oil production, much of which is exported to the West for refining. One recent example is Project Gazelle in Nigeria, a US$3.3bn crude oil-backed pre-export finance facility.

We’re also intervening in financing for medical facilities, aiming to reduce the outflow of dollars from Africa spent on seeking medical assistance abroad. Our partnership with King’s College Hospital UK in Abuja, Nigeria, exemplifies this focus, with the establishment of the African Medical Centre of Excellence, a 500-bed healthcare institution. This initiative aims to retain medical expertise within Africa and reduce reliance on overseas medical services. The aim is to replicate this model in other African countries, with each centre having a different focus and specialisation so that we’re not fragmenting demand. A healthy population is a wealthy population.

 

GTR: While I understand the rationale behind Afreximbank’s continued support for the fossil fuel sector, are you also witnessing an uptick in requests for renewable energy projects?

Mwaba: Absolutely; renewable energy is a key area of focus for us. We’re receiving numerous enquiries regarding solar and wind energy projects. There’s also a growing interest in climate adaptation strategies that require financing.

For example, governments affected by flooding or droughts are seeking financing for infrastructure such as dams to enhance irrigation capabilities and reduce reliance on rain-fed crops. We are advising governments to approach these projects on a commercial basis, suggesting the implementation of water purchase agreements to enable self-financing structures for the dams. We’ve already engaged in discussions with multiple countries on this strategy.

 

GTR: What’s the latest on the progress of the Pan-African Payment and Settlement System (PAPSS), Afreximbank’s initiative aimed at promoting intra-African trade by facilitating transactions in local currencies?

Mwaba: We’re seeing some acceleration in PAPSS adoption rates, which initially were quite slow because the original model limited settlement banks to central banks only. However, based on feedback from central banks and the market, we expanded the system to include commercial banks. This adjustment has led to a remarkable increase in adoption, with over 100 commercial banks already signed up. Clearly, this is the model that Africa wants.

We’re working closely with both central and commercial banks to onboard more participants, and transaction numbers are steadily rising. We plan to publish these statistics on our website soon, which will further underscore the system’s role in underpinning and accelerating intra-regional trade.

 

GTR: We often discuss intra-regional trade within the African context, but it’s notable that the majority of Africa’s trade is with markets outside the continent. In what ways is Afreximbank promoting this?

Mwaba: Intra-regional trade is indeed a priority for us. However, we recognise that Africa will always engage in trade with the rest of the world, given our status as net importers. Even as we strive to increase intra-regional trade, there are certain goods and services that still need to be imported,  such as specialised machinery. As long as there is a lack of technology transfer, we will continue to bring in those capital goods from outside the continent.

The focus for Afreximbank with respect to extra-African trade is to place emphasis on the South-South corridor, tracking metrics such as Africa-South trade levels. We aim to foster more trade between Africa and other emerging markets, aligning with our developmental agenda. Our focus on countries like Brazil, China, India and Turkey – to name a few – is a key driver for us. We prioritise sourcing goods and services from these markets to support Africa’s infrastructure development and economic growth.

 

GTR: I’d like to cover the topic of de-risking in Africa, a topic that Professor Oramah [Afreximbank’s president and chair] is particularly passionate about. What’s your take on Africa’s current position regarding de-risking?

Mwaba: It’s really interesting to see how predictable the response to crises has become. Whether it’s a financial downturn or geopolitical tensions, like the conflicts between Russia and Ukraine or Israel and Palestine, the immediate reaction for banks is often to de-risk. This typically starts with cutting country limits, even if Western banks are interested in engaging with corporates in the affected countries. It’s not always about credit quality; sometimes, it’s a matter of perceived country risk that leads to banks scaling back or cutting their limits.

Recognising this cyclicality, Afreximbank aims to mitigate the impact by positioning itself as the correspondent bank for African banks. This involves expanding the network of African banks to ensure trade continuity during both good and bad times. Our goal is to provide trade confirmation lines for 500 banks on the continent by December 2026. While good progress has been made with around 135 active banks currently, there’s still work to be done.

We aim to cover a significant portion of African banking needs through this initiative, enabling banks to continue issuing letters of credit even during periods of de-risking.

Looking ahead, we acknowledge the immense financing needs of the continent, and we continue to explore new partnerships to share risks and expand our capacity to meet these demands. Our partners primarily consist of development finance institutions that have an appetite, such as BII, ITFC and BADEA, for example. We’re also engaging international commercial banks, some of which are exploring opportunities in Africa with renewed interest. Additionally, we have a programme for repackaging sovereign exposure to attract non-traditional investors such as hedge funds and family offices, aiming to enhance Africa’s access to additional pools of liquidity.

 

GTR: Let’s touch on SMEs and Afreximbank’s support for them; how is this progressing?

Mwaba: SMEs are crucial for any economy, but financing them can be challenging for various reasons. To address this, we’ve done a number of things, including setting new, more accessible criteria for factoring, which is well-suited for SMEs. Additionally, we’ve spearheaded a model law for factoring in Africa to fill legislative gaps. This initiative aims to support both banks and emerging factoring companies, facilitating SME financing. Adoption of the model law has been growing steadily, particularly in Western and Southern Africa.

Elsewhere, in support of SMEs, because we can’t reach these companies directly, we’ve established an SME financing unit, providing liquidity to banks explicitly for SME lending.

Additionally, we have been exploring alternative means of financing SMEs, such as supply chain finance – specifically the payables or reverse factoring model. We’re in the process of launching our first payables finance partnership with Sterling Bank in Nigeria, which will benefit SMEs by offering financing based on their performance in supply chains. We will eventually roll this out across Africa.

Our supply chain finance model is driven by technology, necessitated by the large volume of invoices to process. We’ve developed a proprietary, white-labelled product in partnership with Demica, which we will co-brand with local banks. This allows us to offer both local and foreign currency financing. We anticipate this approach will significantly benefit SMEs and address the financing gap they currently face.