WTO accepted African trade finance proposal
At a workshop organized by the country, the WTO and the International Finance Corporation, Director General Ngozi Okonjo-Iweala welcomed the initiative of the corporate sector and banks to establish a dialogue with the aim of helping traders to reduce transaction costs and better integrate into global trade.
The senior WTO official underscored the urgency of improving access to trade finance for small entities in Africa, and highlighted the severe monetary constraint facing the sub-Saharan region.
Okonjo-Iweala noted that global surveys show that while around 30% of international trade finance goes to small and medium-sized enterprises (SMEs), banks reject around 40% of their applications.
She pointed out that the Covid-19 pandemic has exacerbated trade finance gaps in Africa, which previously stood at some $80 billion a year.
The Director General of the WTO said that the lack of monetary resources or their availability at higher costs than the world market are major obstacles to the integration of African nations into world trade.
For countries to succeed in international markets, their costs for logistics, transportation, border crossings and trade finance must be competitive, she added.
In this regard, she pointed out that controlling these costs requires experience and training, which eventually reduces transaction costs.