Trade Finance Workshop: Supporting SMEs to (sustainable) global value chains

The MFW4A, in collaboration with the AfDB and the Ghana Association of Bankers (GAB), organized a trade finance workshop in Ghana on September 11-12 at the Mövenpick Ambassador Hotel in Accra, Ghana. The workshop aimed to provide a platform for Ghanaian banks to engage with MFW4A partners (AfDB, Afreximbank, Trade and Development Bank, TCX) and relevant local stakeholders to find practical solutions for supporting SMEs in Ghana as they work to integrate into sustainable global value chains. The workshop explored the challenges and opportunities for supporting SMEs to integrate into sustainable global value chains.

Specifically, the workshop aimed to:

• Disseminate insights on the SME landscape in Ghana and trade-related challenges.
• Discuss the financial challenges SMEs face in accessing capital to meet global sustainability standards.
• Explore capacity-building opportunities for SMEs to adopt sustainable practices and improve their integration into global value chains.
• Identify innovative financing solutions for sustainable SMEs, including green financing, impact investment, and blended finance.
• Advocate for policies that support sustainable value chain integration and create an enabling environment for SME financing in Ghana.

The post-event Report is available HERE

Background

Global Value Chains (GVCs) encompass all the activities required to bring a product to the final consumer, from product design to distribution. Participation in GVCs has proven to be a catalyst for economic growth, fostering job creation and promoting sustainable development. Despite a modest increase in intermediate trade (around 1.4% and 2.9% between 1995 and 2020), Africa is lagging far behind other regions such as East Asia, Europe, and North America[1], remaining integrated primarily at the lower levels of the value chains.

Ghana presents significant opportunities for greater integration into global value chains, though these opportunities remain largely untapped[2]:

• Agriculture and agrobusiness: In 2022, Ghana was the world's second-largest producer of cocoa beans, behind Côte d'Ivoire, and the fourth-largest producer of cassava, following Nigeria, the Democratic Republic of Congo, and Thailand. The use of mechanization and ICT in the agricultural sector presents opportunities for the development of agricultural value chains and integration into global value chains, facilitating agro-industrial development.
• Forestry: Ghana has over 35% of its land area under forest cover. An analysis of trade balances between 2010 and 2020 showed that the gains from surpluses in primary wood products were offset by deficits in secondary and tertiary wood products. This highlights both high local demand and a weak industrial status for consumable wood products.
• Natural resources: After Nigeria, Ghana has the highest endowment of renewable natural resources in ECOWAS. In 2018, these resources were estimated at 155.9 billion US dollars, composed of agricultural land (47.3 percent), timber (35.5 percent) and forests (13.4 percent). The rest is made up of mangroves (1.4 percent), fisheries (1.3 percent) and protected area (1.1 percent) (AfDB, 2023). The valorization of these resources constitutes an opportunity to promote green industries and for more sustainability and diversification of Ghana’s economy
• AfCFTA: The African Continental Free Trade Area (AfCFTA) presents a major opportunity for African countries to diversify exports, attract more foreign direct investment (FDI), and achieve their development goals. With the AfCFTA headquarters located in Ghana, the country is strategically positioned to play a leading role in regional integration. The AfCFTA is expected to nearly double Ghana’s trade with regional partners, boosting its merchandise exports by 6 percentage points (AfDB, 2024).

Increasing Ghana's participation in global value chains requires scaling up private sector-led industrialization to enhance value addition in key sectors. As in many African countries, Ghana’s private sector is predominantly comprised of small and medium-sized enterprises (SMEs), which account for about 90% of businesses and approximately 70% of total employment. However, despite their importance, many SMEs face significant challenges that hinder their ability to thrive and integrate into global markets. Ghana has one of the largest SME financing gaps in Africa, estimated at a shortfall of $4.8 billion. Only half of Ghanaian SMEs have access to bank credit, and most loans available are short-term.

Acknowledging these challenges, MFW4A seeked to organize a workshop with the Ghana Association of Banks (GAB) to foster a shared understanding of how banks can better support SMEs’ participation in global value chains.

Key topics featured:

• Macroeconomic Trends in Ghana: Understanding how macroeconomic factors, especially exchange rate risks, impact the SME business environment and banks’ ability to support SMEs.
• The Role of SMEs in Global Value Chains: Identifying opportunities for SMEs to leverage global value chains for growth and market access.
• Scaling Up Financial Solutions for Trade-Related SMEs: Exploring partnerships with Development Finance Institutions (DFIs) and Multilateral Development Banks (MDBs) for solutions like funding, supply chain finance, factoring, and de-risking strategies.
• Sustainability Trends and ESG Standards: Addressing how environmental, social, social, and governance (ESG) standards affect SMEs’ participation in global value chains.
• Leveraging Digitalization: Exploring the role of digital tools and partnerships with fintechs in supporting SMEs.
• Non-Financial Services for SMEs: Scaling up non-financial services for SMEs through financial institutions.