he Pulse check report issued by a consortium of multilateral development banks and trade research institutions, recounts the views of sub-Saharan banks on multi-lateral development banks’ (MDBs) responses to uphold a well-functioning trade finance market.
The report, which brings together perspectives & insights from 70 trade finance executives from 20 countries, unanimously calls for an urgent switch in the focus of support programs towards private sector and smaller enterprises to avoid a ‘second wave insolvency crisis’ that threatens greater, and far more widespread, economic hardship on the continent than we have seen till now.
Demand for trade finance instruments in the first half of 2020 seems to have flattened compared to growth expectations, while banks, supplying those instruments, have typically “flown to safety” restricting their lending to existing clients.
Overall, according to interviewees, the market has contracted from at least 10% on average from 2019 levels in volume and even greater in value because of furloughed projects and investments.
Full recovery is only anticipated by end of 2021 at the earliest.
Banks interviewed mentioned that their main constraints revolved around risk uncertainties / macroprudential limitations to extend credit outside of their comfort zone, especially during a persisting pandemic.
The report makes several priority recommendations for MDBs. These include a switch in focus to private sector support, increasing availability of risk-sharing instruments as well as a more granular funding offering.
The report also illustrates the need to emphasise pooling of efforts and resources across MDBs and DFIs operating in Africa to respond more effectively to the unfolding situation.
Contributing organisations include the African Development Bank (AfDB), the Arab Bank for Economic Development in Africa (BADEA), the Banque Ouest-Africaine de Développement (BOAD), the East African Development Bank (EADB), the International Chamber of Commerce (ICC), the International Trade Center (ITC), the International Islamic Trade Finance Corporation (ITFC), and the Trade & Development Bank (TDB).
Latest Stories
-
Ogum and Kotoko’s March malaise
9 mins -
2 repair vessels dispatched for undersea cable repairs – says NCA’s latest update
51 mins -
Multimedia Group Limited’s Clinton Yeboah shortlisted for 2 International Sports Press Association Awards
55 mins -
High-value property sale gone wrong as Supreme Court rules against police officer
1 hour -
NHIS Biometric Membership Authentication System limited rollout satisfactory – NHIA Deputy CEO
1 hour -
Yara Ghana donates 1,107 bags of fertilizers to women farmers, farmers with disabilities
2 hours -
Tinubu forms team to find solutions to ailing economy
2 hours -
Jacob Zuma barred from running in South Africa election
2 hours -
Western Cape Education wins national primary school track and field championships
2 hours -
Cyber Security Authority issues Public Alert over Easter and Eid al-Fitr season scams
2 hours -
Sandro Tonali charged by FA for alleged betting rules breaches after joining Newcastle
2 hours -
Scancom PLC holds 6th AGM, declares dividend of 17.5 pesewas per share
3 hours -
Former Deputy AG accuses Godfred Dame of unethical legal behaviour
3 hours -
John Kumah goes home on May 18
3 hours -
Tema General Hospital: If a baby died, it wasn’t because of ‘dumsor’ – GHS Accra Director
3 hours