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Okonjo-Iweala Underscores Need to Help African Small Businesses Access Trade Finance
The Director-General of the World Trade Organisation (WTO), Dr Ngozi Okonjo-Iweala has underscored the pressing need for trade finance in African countries, especially for small businesses.
She disclosed this at a workshop organized jointly by Côte d’Ivoire, the WTO and the International Finance Corporation (IFC).
She said the event provided an opportunity for dialogue between businesses and banks, with the aim of helping small traders reduce trade-related transaction costs and better integrate into world trade.
According to a statement issued by WTO, the workshop was established at the request of Côte d’Ivoire, was attended by small importing and exporting companies and their representative organizations in Côte d’Ivoire as well as trainers from four international institutions — the WTO, IFC, the African Development Bank and the Export-Import Bank for Africa.
She highlighted Cote d’Ivoire’s proposals to the WTO on improving access to trade finance for small businesses in Africa and underlined the acute financial constraint, notably the lack of trade finance, which sub-Saharan Africa is facing.
She said: “Global surveys show that, while around 30 percent of international trade finance goes to SMEs, banks reject some 40 percent of applications from such companies. This rejection rate is higher than for any other type of companies. According to the African Development Bank, the rejection rate for letters of credit applications increased by 30 per cent during the pandemic.”
She stressed that the pandemic had accentuated trade-financing gaps in Africa, which, prior to the pandemic totalled about $80 billion per year, representing about 20 per cent of the African trade finance market.
Okonjo-Iweala also said the lack of availability of trade finance or its availability at higher costs than the world market are major obstacles to the integration of African countries into world trade.