Regional Transit Guarantee and Finance Reform Could Boost Intra-African Trade

Caroline Karugu backs streamlined cross-border guarantees as Africa confronts a major trade finance shortfall and Nigeria records rising regional commerce.

Regional Transit Guarantee and Finance Reform Could Boost Intra-African Trade

Kenya’s East African Community Affairs Principal Secretary Caroline Karugu has backed proposals to replace separate national transit bonds with a single regional guarantee, as policymakers and financial institutions seek to reduce the costs restricting trade across Africa.

The proposal comes as a new report estimates that the continent faces an annual trade finance gap of up to US$120 billion. At the same time, Nigeria’s commerce with other African markets rose sharply in 2025, highlighting the opportunities available as businesses increase their use of the African Continental Free Trade Area.

A Single Guarantee for Regional Cargo

According to reports, Karugu described the proposed regional transit guarantee as an important step towards faster and more efficient cross-border trade.

“The replacement of costly national transit bonds with a single, seamless regional guarantee is exactly the type of practical, efficiency-driven reform envisioned by the EAC and indeed AfCFTA: a continent where goods move with minimal delay and where policy supports, rather than obstructs, enterprise,” she said.

The proposed system would eliminate the need for businesses to obtain several national transit bonds while moving goods through the region. It is also expected to reduce paperwork, simplify customs procedures and lower transport costs.

Karugu said streamlined transit processes would improve the movement of goods, strengthen the competitiveness of regional companies and support deeper integration among EAC partner states.

Trade Finance Remains a Major Barrier

However, administrative reforms will need to be accompanied by greater access to capital. According to Afreximbank’s 2026 African Trade Report, Africa faces an estimated annual trade finance gap of between US$80 billion and US$120 billion,

The financing deficit is restricting companies, particularly small and medium-sized enterprises, from accessing working capital, importing production materials, fulfilling export orders and expanding into regional markets.

The report attributed the gap to high transaction costs, limited risk-bearing capacity among financial institutions, weak credit infrastructure and elevated perceptions of sovereign risk.

Guarantees and Payment Infrastructure

The report recommended expanding trade finance facilities and increasing the use of credit guarantees and blended finance instruments. It also called for development finance institutions to play a stronger role in mobilizing private capital for trade-related investment.

Further investment in industrial ecosystems, digital trade infrastructure and efficient payment systems was also identified as necessary to improve business competitiveness.

The Pan-African Payment and Settlement System was highlighted as a mechanism for lowering transaction costs, accelerating cross-border payments and reducing dependence on hard currencies.

Nigeria’s Regional Trade Reaches $9.02 Billion

Hinting at the potential offered by further integration, Nigeria is already recording increased commerce with African markets. According to reports, the value of the country’s intra-African trade rose from $7.47 billion in 2024 to $9.02 billion in 2025.

Crude oil remained a major component of Nigerian exports to the continent, alongside chemicals, plastics and rubber products, processed agricultural goods, food products, urea and cement.

The increase reflects efforts to use AfCFTA to widen market access and lower trade costs for Nigerian exporters. It also demonstrates the potential gains available when improved market access is supported by efficient transport systems and sufficient trade finance.

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