Africa's Supply Chain Finance (SCF) market is brimming with potential, but financial institutions and corporates must first overcome key hurdles on awareness and technology.

Key takeaways:

• Understanding SCF and how each product addresses different client requirements is crucial to understanding the SCF opportunity and its challenges

• The business case for SCF in Africa is strong, but not all solutions have a business case in all markets

• The digitisation of SCF is already helping to bridge the trade finance gap in Africa and build a resilient financial ecosystem

The market for Supply Chain Finance (SCF) in Africa is thriving, outpacing all other regions globally. Yet, despite this rapid expansion, volumes remain just a fraction of those seen in Asia or Europe. This gap presents a unique, untapped opportunity for banks and corporates to dive into a market brimming with potential.

But why should you care? The answer lies in the experiences of the trailblazers – those leading financial institutions, development agencies, and technology providers who are already seizing the moment. 

Their success stories aren’t just inspiring; they offer a blueprint for where the smart money should go next. In this article we hear from some of them, to discuss the strategies shaping the future of SCF in Africa, and finally ask “what’s next?” 

What is Supply Chain Finance?

It’s a simple question, but one even some SCF professionals aren’t aligned on. 

Despite some valiant efforts, there is little standardisation in our industry. That said, what’s important is that Supply Chain Finance (SCF) is not one solution but a suite of solutions. It is not, as many suggest, simply Payables Financing – or Reverse Factoring. 

According to the International Chamber of Commerce, SCF is the use of financing and risk mitigation practices and techniques to optimise the management of working capital and liquidity invested in supply chain processes and transactions. It’s an ecosystem of products, typically applied to open account trade and triggered by supply chain events. 

SCF falls into two main categories: the receivables purchase SCF category and the loan or advance-based SCF category. Within these categories, there are numerous variations with nuances between different countries and client groups. Each product is built to solve different problems at different stages in the supply chain. 

This is vitally important, says Susanne Kavelaar, Global Head Trade Advisory at the International Finance Corporation (IFC), because “once you understand the problem you're trying to solve, you can apply the right product for that purpose.” 

The IFC, a member of the World Bank Group, is the largest global development institution focused on financing the private sector in emerging markets. Its experience bridging the finance gap, providing SCF to emerging market suppliers and advisory services to banks building scalable SCF business operations, means Kavelaar has seen firsthand the potential impact these products can have in Africa.  

On a continent characterised by diverse economies and varying levels of financial inclusion, this “portfolio of solutions”, as Kavelaar calls it, holds enormous promise. It is enabling access to finance for many millions of African enterprises already. 

But it’s not just corporates that benefit, says Kavelaar. “The beauty of SCF is that it’s really a win-win situation for all parties.”

The question is… 

Is there a business case for SCF in Africa?

Before we answer this question, it’s important to understand the context we’re living in, because overall, Africa makes up just 1.9% of global SCF volumes. 

There are a couple of reasons for this. First, a historic reliance on loan and asset-based products dominate the market. Second, and perhaps more importantly, many financial institutions don’t yet have the right internal capabilities, both in terms of experience and operational capacity, to boost the numbers. 

“From our perspective, the business case is strong, just given the amount of trade that's done on open account,” says Michelle Knowles, Managing Executive and Head of Trade & Working Capital at Absa Bank. “But I don't think it's a one-size-fits-all. I don't think all solutions will have significant business cases in all markets.” 

Absa Bank already offers a range of SCF products to help corporates manage risks, negotiate credit terms, reduce pressure on cash flow and trade confidently abroad. From Supplier Finance to Inventory Finance and beyond, Absa has been instrumental in expanding the availability – and diversity – of SCF products on the continent. 

< Read: The case for Distributor Finance in Africa >

Banks must “understand the products, the risks, and the technology or operational challenge before they can proceed” Knowles again. Every party will have different requirements. 

We're talking about a broad portfolio of solutions, so each has a business case of its own. Much of this will depend on whether banks have the right client base, the right understanding of their requirements, the right skills, and the right technology to deliver. 

When it comes to products like Supplier Finance, for example, which are high volume and often low value ticket sizes, innovations like automation are absolutely necessary, says Knowles. “Otherwise you open yourself up to quite significant risks.” Manual processes are slow and costly, but they’re also dangerous – even small mistakes made by single individuals can result in serious reputational or financial ramifications. 

That said, “the beautiful thing about SCF is that while it can require a lot of upfront work, once a facility is set up, with the right technology in place, it’s relatively easy to scale,” says Ahanna Anaba, Head of Digital Solutions & Partnerships at SCF fintech, Finverity.

As one of the region’s leading SCF technology providers, Finverity has worked alongside many financial institutions in Africa to bolster their technology infrastructure and build tailored SCF solutions (*link to I&M article). The experience so far shows that the difference between a business case or not often comes down to technology. 

What role can technology play?

Africa presents a tremendous opportunity for SCF, driven by increasing trade, a growing entrepreneurial ecosystem, and the continent's economic expansion. However, many banks find themselves constrained by lack of adequate technology to fully capitalise on this opportunity. 

Outdated systems and manual processes continue to create friction and pile risk on both banks and clients. 

Even today, clients routinely show up in-person at branches, consuming valuable time and resources better spent on more strategic tasks. Worse yet, they send confidential financial documents via email, exposing sensitive data to potential breaches and leaving institutions vulnerable to compliance risks. And many submit Excel files in inconsistent formats, causing delays as teams struggle to reconcile mismatched data. 

These inefficiencies slow down decision-making on the one hand and increase the chances of errors on the other, ultimately harming relationships and operations. But this no longer has to be the reality. With today’s technology, we can digitise, automate, and streamline these processes – eliminating manual errors, enhancing security, and freeing up resources to focus on what truly matters: growing the business.

< Read: What does innovation look like in Supply Chain Finance? >

“Both multinationals and large local corporates are increasingly asking their banks for solutions that allow them to integrate their ERP solutions for increased visibility and oversight,” says Ahanna Anaba, Head of Solutions and Digital Partnerships at Finverity.

Clients are demanding tailored supply chain finance solutions, but many banks can’t deliver. Without the flexibility to customise products for different industries and business sizes, banks are missing out on new markets and falling short of expectations. 

“Custom products mean that many more African banks can serve a much broader client base with solutions that address very specific problems,” says Anaba. By offering bespoke SCF products, they stand out in a competitive landscape, driving growth and fostering stronger, more personalised financial partnerships.

Banks across Africa are gradually embracing digitisation, recognising the transformative impact it undoubtedly has. These forward-thinking banks are undoubtedly leading the charge in Africa, driving innovation and delivering the most impactful solutions and setting new benchmarks for the industry.

“In the cases where banks are not yet working with a platform provider, IFC is happy to give guidance about the array of possibilities per geography ,”says Kavelaar.

In essence, these technology platforms are revolutionising SCF by allowing banks to expand their service offerings and focus on tailoring processes to suit specific market nuances.

< Read: What are the benefits of an SCF platform? >

What’s next?

Technology has the potential to unlock significant opportunities for banks and corporates in Africa. However, realising these opportunities depends on the right teams, the right skills, and the right environment.

“The key is to keep on communicating with each other about strategic objectives we have in common,” says Kavelaar.

To this end, Finverity, Absa and IFC met recently to discuss these themes, to agree that collaboration between all parties is essential, and to share their expertise with the wider SCF community. 

When stakeholders work together, they create a more cohesive and efficient financial ecosystem. Banks and corporates can share data and insights to better assess risks and tailor financing solutions. Technology providers can bridge gaps by offering platforms to facilitate seamless communication and funding between all parties. Development Finance Institutions (DFI), with their focus on development impact, can play a pivotal role by providing the necessary funding and support to de-risk investments and scale SCF initiatives. 

“There's still a lot of work we have to do jointly as a community,” says Knowles “It can't just be the DFIs and multilaterals, it can't just be the banks, it can't just be the technology partners. We have to come together and share the business case.”

By fostering this collaborative environment, the SCF market in Africa can become more accessible, resilient, and capable of driving sustainable economic growth across the continent.

If you want to know more about the rise of SCF in Africa, the opportunities, the pitfalls, and what a winning SCF strategy looks like, you can watch our video interview with Absa Bank’s Michelle Knowles and IFC’s Susanne Kavelaar.