Trade finance gap is holding back Africa’s growth, says Stanbic
A bank official said there is a need for a better understanding of risk.A lack of access to affordable trade finance is holding back the economic and employment potential of African countries, according to a Stanbic Bank Tanzania official.
Head of Trade Sales Charles Kapufi told Tanzania Daily News that a great number of jobs could be created if small and medium-sized enterprises (SMEs) in Africa could do cross border transactions.
"There is an opportunity for trade financiers to help fill this void but there are a number of barriers to trade that need to be removed. This is why creating uniform rules and standards across various facets of trade will go a long way to closing these gaps and removing these barriers," he said.
Mr Kapufi stressed there is a need for a better understanding of risk and how trade will grow by taking on more risk in an appropriate manner.
"There needs to be more understanding of risk, not just counterparty credit, country, currency risk, but also compliance risk, which is on the rise in Africa (and other emerging markets) and there is a growing concern of de-risking by certain players, who would rather step back than face the higher risks", he said.
According to estimates from the African Development Bank’s recent report on trade finance in Africa, the value of unmet demand for bank-intermediated trade finance stands between $110 (€98.1 million) and $120 billion.