The global shortage of trade finance is worsening, says ICC

Oct 11, 2016

A majority of respondents to an ICC survey reported a global shortage of trade finance.

The global shortage of trade finance is worsening, according to the new Global Survey from the International Chamber of Commerce (ICC).

A majority of respondents (61 per cent) reported a global shortage of trade finance, while only 52 percent of respondents reported an increase in trade finance activity, compared to 63 percent in 2015 and 80 percent in 2012.

While intra-African trade has shown signs of significant growth - accounting for nearly 18 per cent of the region's total trade in 2014, an upward trend from 10 per cent in 2010 - intra-African investment accounts for only 12 per cent of the total value of investment in Africa, in comparison to 33 per cent in Asia. In addition, 66 per cent of businesses find access to finance a significant obstacle to trade in Africa .

"Africa has a trade finance shortage estimated at between $110 to $120 billion - a range far higher than the previous estimate of $25 billion. In particular, the unprecedented fall in commodity values has created liquidity gaps for many banks across the region," said Vincent O'Brien, a member of the ICC Banking Commission Executive Committee.

The Global Survey also shows that small and medium-sized enterprises face 58 percent of total rejections, despite submitting 44 percent of all trade finance proposals.

In addition, 90 per cent of respondents cited the cost and complexity of compliance requirements relating to anti-money laundering regulation as barriers to the provision of trade finance.ADNFCR-2976-ID-801826567-ADNFCR