The combination of increased global trade uncertainty and increasing economic integration in Africa has led South Africa to fully commit itself to closer economic cooperation on the continent. The country eventually joined the multilateral trade bank Afreximbank, as its presence outside the multilateral was becoming increasingly difficult to discern.
“This decision is a historic milestone as both partners seek to unlock trading opportunities within a global financial architecture that is increasingly fragmented due to protectionist policies and shifting trading blocs,” Afreximbank said in a statement. The Bank is a pan-African multilateral financial institution dedicated to promoting and financing intra- and extra-African trade.
South Africa was unable to join the bank when it was established in 1993 due to sanctions imposed by the apartheid regime. When democratic rule came a year later, merger was not a priority as the country already had a sophisticated domestic banking sector, strong capital markets, access to the Development Bank of Southern Africa (DBSA) and its own national development finance institution, the Industrial Development Corporation (IDC).
Successive governments believed that these institutions provided adequate support for the country's trade and development finance needs. Furthermore, unlike many African countries, South Africa had relatively good access to international capital markets and export credit financing, so membership of Afreximbank was not considered necessary.
For many years, South Africa positioned itself as a regional financial center and sometimes prioritized bilateral or global financial engagement over pan-African multilateral mechanisms.
why now?
South African exports have historically been oriented towards Europe, Asia and North America. However, the increasing focus on intra-African trade, including the establishment of the African Continental Free Trade Area (AfCFTA), has given the country more incentive to fully integrate into the continental economy.
The rest of Africa now represents one of the fastest growing sources of demand for South African goods and services. It appears that it is the emerging AfCFTA that has realized South Africa's strategic interests towards deeper engagement with continental institutions such as Afreximbank, at a time when the Bank itself is becoming increasingly important.
Although African economic growth rates have not reached the rates achieved in Asia in the 1990s and 2000s, they still generally outperform global averages and so the continent on which South Africa finds itself offers some of the best opportunities for promoting the country's trade. South Africa is already Africa's largest trading country, accounting for 19.1% of the continent's total trade in 2024.
Any forward-looking view of Africa's economic potential must also take into account the ongoing demographic boom. The continent's population is already 1.4 billion, but it is projected to reach 2.5 billion by 2050 and nearly 4 billion by 2100. This represents a large share of global consumption.
Last August, the South African government approved the decision to take a Class A shareholding in Afreximbank, giving it a stronger voice in the bank's decision-making processes. It became an official member on 4 February, making it the 54th country to join. South African President Cyril Ramaphosa said the decision reflected his country's commitment to “African industrial growth and deepening trade, investment and development across the continent”.
George Elombi, President of Afreximbank, said: “South Africa's membership of the Bank, providing full continental coverage to Afreximbank, puts the country at the center of Afreximbank's vision and its aspirations to promote the desired change in the structure of Africa's trade.”
The move at this time may also have been motivated by South Africa's trade dispute with the United States, which has intensified the need to seek new markets. In August 2025, US President Donald Trump imposed a 30% tariff 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 already 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 country 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 expected to grow by 7.5% to $42.1 billion in 2024.
As well as accession, Afreximbank also agreed a massive $8 billion in finance for South Africa, including the mining and automotive sectors, as well as industrial parks and special economic zones, as part of the country's National Development Plan 2030.
Nearly $6 billion worth of projects have already been proposed and are under review, including $3 billion that will be committed to a facility to support projects owned primarily by black South Africans. “These programs are designed to expand the Bank’s developmental impact, enhance industrial development and regional supply chains, and significantly boost intra-African trade and investment flows,” Afreximbank said in a statement.
Impact on Afreximbank
South Africa's addition is a timely boost for Afreximbank at a time when the bank is facing challenges to its international credit rating. Institutional investors view South Africa as a gateway to African markets, so its participation signals confidence in the bank's viability and governance standards. At the end of December 2024, Afreximbank's total assets and contingent assets stood at more than $40.1bn and its shareholders' funds stood at $7.2bn.
The addition of South Africa will give Afreximbank a larger shareholder base to expand its trade finance capacity and lending, which in turn could reduce funding 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 special financial advisor to raise $1.7 billion of capital for the Suiso project in Mpumalanga province. The coal-to-fertilizer project will provide essential inputs to the agricultural sector through coal gasification, while reducing reliance on imported fertilizers by securing a new outlet for South African coal production.
Suiso plans to set up a blue ammonia production plant with a production capacity of 2,600 tonnes per day of urea and 1,600 tonnes of ammonium nitrate per day. ACMA will work to raise and structure the necessary capital for the project.
In a separate development, Afrex-Imbank and DBSA signed a master risk partnership agreement at the Mining Indaba 2026 in February to expand trade finance capacity across Africa. “This agreement is a risk-sharing framework for funded and non-funded partnerships that support local capital markets, particularly through credit lines to regional banks for trade finance,” the DBSA said.
By creating a joint structure, the two organizations expect to be able to deploy capital together more quickly, rather than having to negotiate 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 promoting 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 exporters to enter and expand into other African markets. These benefits will reduce constraints such as lack of working capital, foreign exchange volatility and payment risks from new or unfamiliar markets.
Johannesburg's banks, insurance companies and other financial services companies will now have greater access to Afrex-ImBank's products and network, which will support 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 Diaspora Bonds, which take advantage of global investors' interest in African development.
South African companies often struggle to secure commercial financing for trade deals with counterparts based in less established African markets. However, Afreximbank provides both pre-shipment and post-shipment financing to support production and ensure liquidity after goods are shipped. It also provides guarantees and risk mitigation to protect against non-payment by buyers and provides structured trade finance, especially for complex transactions.
Instead of exporting minerals in the raw state, South African companies can use Afrex-Imbank's financing to develop down-stream processing facilities, creating jobs and capturing more value domestically. By investing across value chains, particularly in manufacturing and agro-processing, South Africa and its African trading partners can benefit in terms of jobs, technology 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 connectivity between South Africa and neighboring countries and reduce logistics bottlenecks.
Afreximbank's membership provides South Africa with direct participation in the AfCFTA trade facilitation mechanism and access to financing for projects designed to remove non-tariff barriers. Gaining a greater voice in the governance of African financial institutions could position South Africa as a partner in continental development rather than remaining somewhat marginalised. n
© Copyright IC Publications 2026 Provided by Syndigate Media Inc. (Syndigate.info).