Supply Chain Finance in Africa – A Shared Prosperity

Introduction

Africa, recognized as the cradle land of man, and blessed with abundant economic, agricultural, and human resources holds 65% of the world’s uncultivated arable land and employs more than half of its workforce in the agricultural sector which is a driver of food security, trade and industrialization. Yet, this potential remains largely untapped, limiting the attainment of shared prosperity across the continent.

Plagued by systemic bottlenecks, with one of the most pressing being limited access to affordable finance, the agricultural supply chain across Africa is not optimal. According to the IFC, the financing gap for agri-SMEs and smallholder farmers on the continent is estimated at $117 billion. This gap leads to post-harvest losses, inconsistent production, and weak integration into formal markets. Logistics inefficiencies and infrastructure gaps compound the problem, creating a cycle of low productivity and limited growth.

Supply Chain Finance (SCF) offers a transformative solution, not only as a financial tool but as an inclusive economic growth enabler across Africa’s supply chains. By leveraging the creditworthiness of large buyers, SCF provides short-term, working capital financing to farmers, processors, and distributors. This approach unlocks liquidity, reduces financing costs, and strengthens value chain resilience. With SCF, African agribusinesses can invest in mechanization, improve storage, and ensure timely delivery, enabling them to scale operations and compete in global markets.

Lack of Access to Working Capital is the key pain point faced by small businesses in Africa.

Large Corporates and Government buyers often have long payment terms or simply just delay payments. Small suppliers, who have to pay for raw materials and labor upfront, cannot cover this cash-flow gap leading to slow growth of their business due to unpredictable and delayed cash flow from overdue receivables. Even when credit is available, interest rates are very high making borrowing prohibitive because banks are highly risk averse to lending to small suppliers due to lack of collateral, insufficient data on their financial history and high default risk.

SCF as a solution

As a powerful engine of shared prosperity across Africa’s agricultural value chain, SCF can unlock affordable, collateral-free financing for SMEs. For input suppliers, it ensures steady cash flow to deliver quality seeds and equipment; for farmers, it provides early payment and working capital to invest in better yields; and for aggregators, manufacturers, and logistics providers, it bridges cash gaps to scale operations, reduce waste, and strengthen supply networks. Distributors and retailers benefit from improved inventory financing, while consumers gain access to affordable, reliable products. Financial institutions and fintechs also grow by safely extending credit through buyer-backed transactions, driving financial inclusion and market data generation.

By connecting all actors, from seed producers to end consumers, supply chain finance creates a more resilient, equitable ecosystem, fueling food security, job creation, and inclusive economic growth aligned with the Sustainable Development Goals and Africa’s Agenda 2063 vision (African Union’s long-term blueprint for transforming the continent into an integrated, prosperous, and peaceful region by 2063).

The African Continental Free Trade Area (AfCFTA) amplifies this potential by removing trade barriers, expanding market access, and enabling seamless cross-border supply chains. By harmonizing trade policies and opening Africa’s $3.4 trillion market, AfCFTA creates fertile ground for SCF solutions to thrive, ensuring agricultural value chains can scale beyond borders.

Shared prosperity in African agriculture requires that every participant capture fair, timely value from their contribution—input suppliers, smallholders and commercial producers, aggregators, manufacturers, storage providers, transporters, distributors and wholesalers, retailers, and the enabling services that connect them. When one link is starved of affordable finance, the entire chain pays—through stockouts, quality downgrades, post-harvest loss, and missed export windows.

This is the missing opportunity.

Insights from other markets

Supply chain finance (SCF) platforms are reshaping agricultural and trade ecosystems across diverse markets. Case studies from Brazil, Nigeria and South Africa are note below:

Nigeria – Sonnex Group

In Nigeria, digital marketplaces like Fiducia are redefining the landscape by connecting buyers, suppliers, and financiers on a single platform, automating invoice financing, enabling low-cost funding, and scaling operations for MSMEs across different sectors. Sonnex Packaging Nigeria partnered with Fiducia to implement a digital Supply Chain Finance (SCF) solution aimed at improving working capital and cash flow for its suppliers. In a market where high borrowing costs and limited access to financing constrain small and medium-sized enterprises, Fiducia’s platform enabled Sonnex’s suppliers to receive early payments at competitive rates, reducing financial strain and enhancing operational efficiency. By streamlining invoice submission and payment processes, the solution strengthened Sonnex’s supplier relationships, ensured timely production, and improved liquidity for suppliers, while demonstrating the effectiveness of digital SCF solutions in supporting SME growth and building more resilient supply chains in emerging markets.

Brazil – Corteva

Brazil is South America’s largest economy, however, high cost of capital makes traditional financing expensive, particularly for small suppliers who often lack sufficient working capital. In such a context, Supply Chain Finance (SCF) emerged as a strategic solution, transferring the payment risk from the small supplier to a larger, higher-rated buyer.

Corteva Agriscience, a multinational in agricultural technology, implemented SCF in Brazil to address supplier demands for faster payments and competitive rates. Initially, their program faced challenges: slow supplier onboarding and delayed invoice submissions, which hindered timely financing. Partnering with a digital platform, Corteva introduced a more efficient workflow where multiple financing partners bid for invoices, offering suppliers lower rates and faster access to cash. This automated solution, which earned the IBEF 2022 Innovation Award, streamlined transactions while maintaining the buyer’s standard payment terms.

South Africa – Shoprite

In September 2022, Shoprite introduced a supply chain finance solution designed to provide South African suppliers, particularly small, medium, and micro enterprises (SMMEs), with affordable and accessible funding. This initiative aims to address the significant cash flow constraints and limited access to affordable financing that many SMMEs face, which are major obstacles to business growth in South Africa. It offers several benefits, including an all-inclusive interest rate with no additional fees, financing of 100% of invoice value, and approval and payment of financing within 24 to 48 hours.

These SCF approaches demonstrate how innovative financing solutions can mitigate high capital costs, improve liquidity, and strengthen collaboration between buyers, suppliers, and financial institutions.

Technology-enabled solution.

Driving access to finance in agriculture and trade requires a multi-pronged approach that blends technology, incentives, and collaboration.

Digital transformation, particularly through e-invoicing and trade digitization, plays a pivotal role in streamlining documentation, minimizing transaction costs, and enhancing transparency across supply chains. Fintech-driven SCF platforms further leverage this transformation by connecting buyers, suppliers, and financiers on a unified digital ecosystem, automating critical processes such as invoice verification, credit scoring, and payment settlements, thereby improving efficiency and reducing operational bottlenecks.

Large buyers, often referred to as anchor companies, play a crucial role in fortifying supply chains by offering incentives to their vendors, such as accelerated payments or access to discounted financing rates. These measures not only improve the liquidity and financial stability of suppliers but also foster stronger relationships, trust, and long-term loyalty within the supply network.

De-risking mechanisms are essential to encourage lender participation in SCF programs, particularly for SMEs that are typically considered high-risk borrowers. Instruments such as trade credit insurance, partial guarantees, and anchor-led financing arrangements reduce the exposure of banks, development finance institutions (DFIs), and private investors to potential defaults. For example, India’s M1xchange platform partnered with Tata AIG to embed Trade Credit Insurance (TCI) within its digital ecosystem, transferring some repayment risk from SMEs to insurers and buyers. By mitigating credit risk, these mechanisms unlock financing that would otherwise be unavailable, broadening access to working capital, enabling suppliers to scale operations, invest in innovation, and fulfill larger orders.

Public–private partnerships are also critical for scaling access to working capital and promoting inclusive growth, as development finance institutions (DFIs), governments, and regulators collaborate to create enabling policies, provide credit guarantees, and implement targeted interventions. These coordinated efforts help reduce financing gaps, support SMEs and small suppliers, and unlock shared prosperity across agricultural and trade value chains.

Conclusion

Shared prosperity through supply chain finance (SCF) requires Africa to be intentional in its plans and deliberate in its actions. By digitizing trade processes, fostering financial inclusion, and strengthening collaboration between stakeholders, the continent can unlock a future where agricultural and trade value chains thrive. SCF offers a pathway to bridge financing gaps, reduce risk, and empower farmers, SMEs, corporates and other players within the supply chain finance ecosystem.

With visionary leadership, innovative technology, and supportive policies, Africa can transform its supply chains into engines of equitable growth delivering resilience, competitiveness, and prosperity that is truly shared across communities and generations.

About the Author

Ade ADEFEKO is Director Corporate and Regulatory Affairs Olam Agri, ex-Officio NACCIMA, and Honorary Consul of Botswana in Lagos.