BRIDGING THE TRADE FINANCE GAP FOR SMEs IN AFRICA: THE ROLE OF AFREXIMBANK, COMMERCIAL BANKS AND GOVERNMENT

Abstract This study examined the reported relationship between three major sources of finance such as Afreximbank financing, commercial-bank financing and government-supported finance and the performance of small and medium-sized enterprises (SMEs) across African regional economic communities. The study was motivated by persistent evidence that inadequate trade finance constrains working-capital availability, export participation and productive investment, particularly among smaller firms. A country-level panel framework was specified for 45 African countries over 2000-2026, with SME productivity, employment, export share, GDP contribution and value added treated as alternative performance outcomes. The reported analysis comprised descriptive statistics, pairwise correlations, panel unit-root tests, Hausman model selection, fixed-effects panel estimation and robustness checks. The reported estimates showed positive associations between each financing source and all five SME performance measures. Commercial-bank financing recorded the largest coefficient in each baseline specification, followed by Afreximbank financing and government financing. Inflation was reported to be negatively associated with SME performance, whereas GDP and trade openness were generally positively associated with performance. Regional estimates indicated the strongest reported financing-performance associations for SADC, followed by COMESA, EAC, ECOWAS and UMA. The study interpreted these results as evidence in favour of a complementary financing architecture in which commercial banks provide scale and proximity, Afreximbank provides regional trade-finance and risk-sharing capacity, and governments address market failures through guarantees, credit infrastructure and targeted interventions. Because the underlying data are observational and several financing variables are highly correlated, the findings were interpreted as conditional associations rather than definitive causal effects. The study recommended stronger credit-information systems, regional guarantee mechanisms, digital trade-finance infrastructure, improved institutional coordination and greater macroeconomic stability. Keywords: Trade finance, SMEs, Afreximbank, Commercial banks, Government finance, Exports, Africa, Regional integration