Ngozi Okonjo-Iweala, the Director-General of the World Trade Organization, has stated that trade finance is crucial to accelerating trade growth in Africa.
For Africa to participate more actively in international trade, she said it was critical to remove financial obstacles for the continent’s small business owners.
On Wednesday, Okonjo-Iweala delivered a video message at a workshop on trade finance in Kigali, Rwanda.
“Trade finance is the heart and soul of commerce. For a company to be competitive in global markets, access to trade finance is essential, she said.
According to her, the opportunity for dialogue among banks, local government agencies and businesses could lead to better cooperation.
She spoke on the significant shortfall in financing for small traders in Africa. According to the African Development Bank’s trade finance survey, the continent rejected about $80bn worth of requests for trade finance annually.
The WTO DG outlined the key findings of the WTO-IFC joint study on trade finance gaps in the four largest economies of the Economic Community of West African States- Côte d’Ivoire, Ghana, Nigeria, and Senegal, issued in 2022.
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According to her, this revealed that if ECOWAS countries raised the share of trade supported by trade finance to the average African level of 40 per cent, they could gain an extra eight per cent in trade flows annually. In 10 years, this would total $140bn in additional trade, she said.
The Managing Director, International Finance Corporation, Makhtar Diop, said one of IFC’s top priorities was to enhance small businesses’ access to trade finance through its Global Trade Finance Program.
“Recently, the programme committed a record $6bn in 74 countries, African countries can only fully benefit from the African Continental Free Trade Area by bridging the trade finance gap on the continent,” Diop said.
Diop highlighted the importance of enhancing the digitalisation of trade finance to improve its reach, increase efficiency and transparency, and reduce processing time and cost for transactions.
He added that in a fragmented world, trade was what brought us together.
Okonjo-Iweala noted that the Kigali workshop was playing an important role in addressing the trade finance gap head-on for small traders, especially women-owned businesses.
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