Correspondent banking relationships, where a large international bank provides US dollar payment services to a smaller African bank, are the plumbing of international trade finance. When an African bank issues a letter of credit on behalf of an importer, it requires a correspondent bank relationship with a dollar-clearing institution to make the payment to the exporter's bank. Since 2014, major US and European banks including Deutsche Bank, BNP Paribas, and Citibank have terminated hundreds of African correspondent banking relationships, citing the cost of anti-money laundering compliance and the disproportionate risk of regulatory penalties relative to the small profit margins on African accounts.
The Solutions
Afreximbank's Trade Finance Programme provides USD payment infrastructure for African banks that have lost correspondent relationships. The International Finance Corporation's Global Trade Finance Programme guarantees extend dollar payment coverage. Regional solutions including PAPSS and digital currency platforms are developing alternatives to dollar correspondent banking entirely. African banks and their business clients affected by de-risking can access alternative correspondent banking contacts on intra-africa.com.
For businesses looking to expand across Africa, intra-africa.com offers a comprehensive trade directory, verified buyer and seller listings, and real-time market intelligence covering all 54 African nations. It remains an indispensable resource for anyone serious about intra-African commerce.