The ability of businesses in Ghana to actively participate in global trade as well as export is greatly being affected by access to finance and cost of funding.

This was captured in the World Trade Report 2023, released in Geneva Switzerland on September 12, 2023 on the sidelines of the World Trade Organization’s (WTO) Public Forum.

According to the WTO, Ghana is one of four countries in West Africa assessed for its ability to fund trading and export through banks.

The report revealed that “countries’ trade expansion was vastly constrained by limited and costly access to trade finance”.

The report also showed that just like the other four ECOWAS countries including Ghana, trade finance supported only 2% import and export, lower than African average of 40% and the global average of 60-80%.

It also emerged that there was high rejection rate when it comes to trade finance with “small businesses and women owned SME application” which the report said is “disproportionate”.

Dealing with this challenge

The report indicated that trade finance coverage could be improved if finance costs is enhanced for new SMEs.

It also believed that the four countries, including Ghana could see an increase of 8.0% in trade each year or $13 billion.

Speaking to Joy Business, Chief Economist at the WTO, Ralph Ossa, noted that Ghana will have to deal with market failures resulting in limited trade finance for businesses.

“Maybe there might be the need for government to also step in as well as some international institutions to deal with this challenge”, Mr. Ossa said.

“Is there a reason why banks are not supporting these businesses and what needs to be done to correct this problem? Trade finance overall in Africa is not well developed as trade finance in North America  and this has contributed to this high  trade cost that we are measuring”, he  added.

On his part, the Director General of the World Trade Organization, Ngozi Okonjo-Iweala called for coordinated efforts to close trade financing gaps.

She emphasised the need for technology and training to facilitate knowledge transfer and assist capacity building for small businesses.

Other issues identified by the WTO trade report

The report made a strong case for “Re-Globalization” amid early signs or fragmentation.

The report also confirmed that geopolitical tensions are beginning to affect trade flows.

However, the report contends that, despite these findings, international trade continues to thrive, implying that talk of de-globalization is on balance still not supported by the data.

The publication pointed to the expansion of digital services trade, environmental goods trade, and global value chains in addition to the resilience of trade to recent global crises.

World Trade Organization’s Public Forum

The World Trade Organization is trying to use its flagship gathering, “The WTO’s Public Forum” to focus on sustainable trade.

The Public Forum is the WTO’s largest outreach event, providing a unique platform for interested stakeholders from around the world to discuss the latest developments in global trade and to propose ways of enhancing the multilateral trading system.

 The event brought together over 2,000 representatives from civil society, academia, business, government, international organisations and the media.