Development Finance Institutions and Trade Promotion in Africa

Intra-regional trade in sub-Saharan Africa continues to lag other regions globally. This was exacerbated by the COVID-19 pandemic, as a result of the widespread border closures and physical distancing protocols across the region. The war that erupted in Ukraine in February 2022 intensified supply-side disruptions, leading to an overall decline in global trade. Despite the low trade volumes in the region, Development finance institutions (DFIs) have played a key role in helping to address some of the challenges that have militated against free trade in the region through direct and indirect interventions. This chapter discusses the different types of DFIs, from bilateral, regional to multilateral DFIs, and explores the value addition that DFIs have introduced to promote trade. Specifically, it discusses the specific interventions of DFIs in trade promotion through the use of long- and short-term financing, direct and indirect debt, equity, guarantees, grants, innovative financing, trade finance and project finance, as well as providing advisory services and technical assistance to their clients.