SAVE the date! MFW4A Webinar on Trade Finance
Overcoming Challenges of Trade Finance in Africa Wed 21st March 2018 Time: | 14:30 (Abidjan) GMT
Making Finance Work for Africa (MFW4A) and the African Development Bank (AfDB), are hosting a webinar themed ”Overcoming Challenges of Trade Finance in Africa”.
Register now to join the session! The unavailability of trade finance is a major impediment to the development of Africa’s trade sector and more acutely, the intra-African trade. Boosting Africa’s intra-regional and international trade requires a good understanding of the African trade finance landscape. However, very little is known about the trade finance market in Africa.
There are several obstacles to increasing trade finance by African Banks. Regulatory issues present considerable challenges and are among the main constraints to expanding their trade finance portfolios. International standards, especially anti-money laundering (AML) and Know Your Customer (KYC) rules have become more stringent as have risk capital requirements since the global financial crisis - and will become even more so with the implementation of Basel III.
The existence of a responsive financial system equipped to provide appropriate trade finance solutions to clients, especially SMEs and local businesses is a critical success factor in trade expansion and economic development. However, rising compliance costs combined with inadequate collateral required to assess clients’ creditworthiness, has created the perception that trade finance operations are highly risky and costly in Africa. These factors are driving the current de-risking move, with some international banks reducing their correspondent banking relationships with African banks whilst others are simply withdrawing from the continent.
In an effort to fill the knowledge gap surrounding trade finance, the African Development Bank (AfDB) carried out two surveys in 2013 and 2015, to improve the understanding of bank–intermediated trade finance market in Africa. The second AfDB Trade Finance Survey published in September 2017 estimated the bank-intermediated trade finance gap in Africa at USD 91 billion in 2014. A sample of the Report’s main findings is outlined below:
Banks support about one third of total trade in Africa;
In 2014, only 20% of bank-intermediated trade finance was devoted to intra-African trade (up from 18% in 2011);
Trade finance continues to be a relatively low-risk activity for commercial banks in Africa;
SMEs account for only 28% of banks’ total trade finance portfolio; and
First time applicants face significant challenges in accessing trade finance facilities from banks.
If you are interested in learning more about the state of trade finance in Africa, the associated challenges including the major reasons why banks reject trade finance as well as discuss the report recommendations, this webinar will be of great value to you.
This webinar will also serve to kick start the MFW4A Trade Finance Initiative, a collaborative effort between BMZ/GIZ and the AfDB. The Initiative aims to mobilize the broader trade finance community in Africa and abroad to establish a multi-stakeholder dialogue platform. The ultimate goal is to fill the knowledge and skills gaps in trade finance, and improve policy formulation and regulation through a combination of knowledge and information sharing, research, advocacy, policy dialogue, capacity building.
Lamin Drammeh is the Chief Trade Finance Officer at the African Development Bank (AfDB). He has two decades of progressive experience working in the Gambia, Senegal, Tunisia and Côte d’Ivoire in government, NGO, commercial and development banking sectors. He specializes in Trade Finance, Treasury, Accounting, Corporate Banking, project finance and portfolio management.