Acombination of heightened global trade uncertainty and growing economic integra- tion in Africa has prompted South Africa to commit itself more fully to closer economic coopera- tion on the continent. The country has finally joined multilateral trade bank Afreximbank, as its presence outside the multilateral became increasingly difficult to understand.

The decision “constitutes a historic milestone as the two partners seek to unlock trade opportunities within a global financial architecture that is rapidly frag- menting due to protectionist policies and shifting trade blocks”, Afreximbank said in a statement. The bank is a pan-African multilateral financial institution dedi- cated to promoting and financing intra- and extra-African trade.

South Africa was unable to join the bank when it was set up in 1993 because of a ban over the apartheid regime. Acces- sion was not a priority when democratic rule arrived one year later as the coun- try already had a sophisticated domestic banking sector, strong capital markets, access to the Development Bank of South- ern Africa (DBSA) and its own national development finance institution, the Industrial Development Corporation (IDC).

Successive governments believed that these institutions provided sufficient sup- port for the country’s trade and develop- ment finance needs. Moreover, unlike many African countries, South Africa had relatively good access to international capital markets and export credit financ- ing, so membership of Afreximbank was not seen as essential.

For many years, South Africa posi- tioned itself as a regional financial hub and sometimes preferred bilateral or global financial engagement over pan- African multilateral mechanisms.

Why now?

South African exports historically have been oriented toward Europe, Asia and North America. However, the growing focus on intra-African trade, including through the establishment of the African Continental Free Trade Area (AfCFTA), has created more impetus for the country to become more fully integrated in the continental economy.

The rest of Africa now represents one of the fastest-growing sources of demand for South African goods and services. It is the emerging AfCFTA that seems to have realigned South Africa’s strategic interests toward deeper engagement with continen- tal institutions such as Afreximbank, at a time when the bank itself is becoming increasingly important.

Although African economic growth rates have not reached anything like those achieved in Asia in the 1990s and 2000s, they still generally outperform the global average and so the continent on which South Africa finds itself offers some of the best opportunities to boost the country’s trade. South Africa is already Africa’s big- gest trading nation, accounting for 19.1% of the continent’s total trade in 2024.

Any long-sighted view of Africa’s eco- nomic potential must also take the ongo- ing demographic boom into account. The continent already has a population of 1.4bn but this is forecast to reach 2.5bn by 2050 and about 4bn by 2100. That represents an enormous share of global consumption.

Last August, the South African gov- ernment approved the decision to take a Class A shareholding in Afreximbank, which gives it a strong voice in the bank’s decision-making processes. It became an official member on 4 February, making it the 54th country to join. South Africa’s President Cyril Ramaphosa said the deci- sion demonstrated his country’s commit- ment to “African industrial development and to deepening trade, investment and development across the continent”.

Afreximbank’s president, George Elom- bi, noted: “South Africa’s membership of the Bank, while providing Afreximbank a full continental coverage, brings the country into the heart of Afreximbank’s vision and its aspirations to promote the change so much desired in the structure of Africa’s trade.”

The move may also have been prompted at this time by South Africa’s trade dispute with the US, which has intensified the need for it to seek out new markets. In August 2025, US President Donald Trump imposed 30% tariffs on all South African imports, the highest rate allocated to any country in sub-Saharan Africa.

South Africa is a major contributor to intra-African trade and Pretoria had al- ready promoted greater trade with the rest of the continent. According to Afrex- imbank’s 2025 African Trade Report, the country was the leading intra-African trading nation in 2024. About 24.6% of all South African exports by volume are sold to other African markets, with the country’s intra-African trade growing by 7.5% in 2024, to $42.1bn.

Alongside accession, Afreximbank also agreed a massive $8bn in finance for South Africa, as part of the country’s National Development Plan 2030, including in the mining and automotive sectors, plus in- dustrial parks and special economic zones.

About $6bn-worth of projects has al- ready been proposed and are under review, including $3bn that will be committed to a facility to support projects mainly owned by Black South Africans. “These programmes are tailored to expand the Bank’s developmental impact; enhance industrial development and regional sup- ply chains and significantly boost intra- African trade and investment flows,” said Afreximbank in a statement.

Impact on Afreximbank

South Africa’s accession is a timely boost for Afreximbank at a point when the bank faces a challenge in terms of its interna- tional credit ratings. Institutional inves-tors tend to view South Africa as a gateway into African markets, so its participation signals confidence in the bank’s viability and standards of governance. At the end of December 2024, Afreximbank’s total assets and contingencies stood at over $40.1bn and its shareholder funds $7.2bn.

South Africa’s accession will give Afreximbank a larger shareholder base to expand its trade finance capacity and lending, which in turn could reduce fund- ing costs. Afreximbank will also benefit from South Africa’s expertise in banking and capital markets, and its experience in structured financing and risk mitigation.

Last May, Afreximbank’s Advisory and Capital Markets (ACMA) department was appointed exclusive financial advisor to raise $1.7bn capital for the Suiso Project in Mpumalanga Province. The coal-to- fertiliser project will provide necessary in- puts for the agriculture sector through coal gasification, while reducing dependency on imported fertilisers by securing a new outlet for South African coal production.

Suiso plans to set up a blue ammonia production plant with production capacity of 2,600 tonnes a day of urea and 1,600 tonnes a day of ammonium nitrate. ACMA will work to mobilise and structure the capital needed for the project.

In a separate development, Afrex- imbank and DBSA signed a Master Risk Participation Agreement at Mining Indaba 2026 in February to extend trade finance capacity across Africa. “The agreement is a risk-sharing framework for funded and unfunded participations that support local capital markets through lines of credit specifically for trade finance to regional banks,” DBSA said.

By creating a joint structure, the two organisations hope to be able to deploy capital together more quickly, rather than negotiating their participation on each transaction on a case-by-case basis.

It will focus on critical minerals and other working-capital-intensive value chains by supporting trade in equipment and other inputs, thereby encouraging the expansion of local processing and value chain development.

Benefits for South Africa

Access to Afreximbank’s trade finance, credit facilities and risk mitigation tools will make it easier for South African ex- porters to enter and expand into other Af- rican markets. These benefits will reduce barriers such as a lack of working capital, foreign exchange volatility, and payment risks from new or unfamiliar markets.

Johannesburg’s banks, insurance firms and other financial services companies will now have greater access to Afrex- imbank’s products and networks, sup- porting cross-border investment flows, local currency financing initiatives and cross-border risk-sharing structures.

There is also potential for South African pension funds and institutional investors to align capital with Afreximbank’s bond issuances, including Eurobonds and dias- pora bonds, which tap into global investor interest in African growth.

South African companies often strug- gle to secure commercial financing for trade deals with counterparts based in less established African markets. However, Afreximbank offers both pre-shipment and post-shipment financing to support production and ensure liquidity after goods have been shipped. It also provides guarantees and risk mitigation to protect against non-payment by buyers and be- spoke structured trade finance, particu- larly for complex transactions.

Instead of exporting minerals in a raw state, South African firms can use Afrex- imbank’s financing to develop down- stream processing facilities, creating jobs and capturing greater value domestically. By investing in value chains, particularly in manufacturing and agro-processing, South Africa and its African trading part- ners can benefit in terms of jobs, technol- ogy transfer and higher trade volumes.

South Africa will also gain access to project finance for regional infrastructure and industrial development initiatives linked to regional trade routes, such as new roads, railways, customs posts and industrial parks.

These investments can strengthen con- nectivity between South Africa and neigh- bouring countries and reduce logistical bottlenecks.

Membership of Afreximbank also pro- vides South Africa with direct participa- tion in AfCFTA trade facilitation mecha- nisms and access to financing for projects designed to remove non-tariff barriers. Gaining a bigger voice in the governance of African financial institutions can position South Africa as a partner in continental development rather than staying some- what on the fringes. n

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