African trade activity continues to increase

With African nations not seeing the same lockdown measures and restrictions as Europe and America, trade activity on the continent continues to increase. Orbitt provides our readers with an analysis of companies that approached Orbitt to finance trading activity in 2021.

Orbitt had previously reported an 80% increase in lender activity for trade finance related deals on the platform between 2019 and 2020. This quarter, there has also been an increase in the number of individual companies seeking funding for trade-related purposes – a 29% increase when compared with the same time period in 2020.

Agriculture remains the sector with the most activity, with 32% of fundraising enquiries coming from companies directly involved in the agriculture value chain. The data also shows an increase in its supporting industries. The transportation industry and the financial institutions supporting agricultural growth have seen an increase representing 11% and 16% of the unique opportunities on the platform, respectively.

Although most of these companies engage in crossborder trade, either through import or export of goods, 45% of fundraising enquiries came from companies with their main base of operation in West Africa. Additionally, 29% of enquiries came from East Africa, with Nigeria, Cameroon, Ghana, Kenya and Mauritius recording the highest number of enquiries.

Orbitt data also shows a diversification in the type of funding being sought by these companies. Over 50% of all fundraising enquiries were for ticket sizes between $3m and $10m, and the majority of this was for working capital. Twenty-five percent of fundraising enquiries were for working capital facilities to support company trading operations, 17% were seeking asset finance to increase their operations capacity, and 14% of these enquiries were for inventory finance secured by a third party collateral manager (CMA).

The Orbitt perspective

The trade finance space in Africa continues to see increased activity despite the slowdown in other parts of the world. The agriculture industry specifically continues to dominate, creating new markets for supporting industries.