During this virtual launch, expert panelists will unpack the current trade finance landscape in the region, addressing, amongst other topics, drivers of trade finance demand and supply in Africa, unmet trade finance demand at the country level, and the impact of the trade finance gap on trade participation by firms. Experts will also discuss policy recommendations on how to support discouraged trade finance applicants, trade finance digitization and how to reduce the trade finance gap in general. Participants will gain a better understanding of the challenges, opportunities and future of the trade finance market in Africa.
About the Publication
There is limited understanding of the trade finance market in Africa, mainly due to a lack of data.
Since 2014, the African Development Bank has played a leading role in studying the trade finance market to support trade finance policymaking in the region.
While previous studies have focused on trade finance supply, numerous questions remain unanswered on trade finance demand by firms in Africa; including but not limited to, the value of trade lost by firms due to lack of access to finance, the choice of trade finance instruments, challenges firms face in managing trade finance, and why some firms are discouraged from applying for trade finance. Answering these questions has important implications for trade finance policymakers and practitioners in Africa.
To help fill some of the knowledge gap, for the first time, the AfDB, has conducted a deep-dive analysis of the trade finance market in Kenya and Tanzania, using data from 58 commercial banks and 804 firms across multiple sectors. The report is the most comprehensive study combining demand- and supply-side data to understand the trade finance market in Africa.
The report outlines policy recommendations to help support the trade finance market in Africa, including the need to (i) address the structural issues of low credit worthiness and insufficient collateral, (ii) develop innovative trade finance instruments to support discouraged trade finance applicants, (iii) support the digitization of trade finance transactions to reduce delays in processing and to minimize bureaucracy. The study also recommends that SMEs, particularly women-owned SMEs, be supported to develop better risk and capital management systems to ensure that they can easily access finance, meet their financial obligations, and take on sustainable debt to stay creditworthy.