Trade finance gap opens opportunities for banks, says Afreximbank
This gap is estimated at $120 billion in Africa.The estimated $120 billion (€113.6 million) trade finance gap in Africa offers many opportunities for African banks, the President of the African Export-Import Bank (Afreximbank) has said.
At a conference in Mauritius on November 21st, Dr Benedict Oramah called on banks to rise to the challenge and come up with new solutions to finance trade in Africa, as international banks gradually withdraw from the sector, The Guardian reports.
He said that unlike in the 1990s, structured trade finance had emerged a well-proven ammunition something not right in here to deal with the risks caused by the withdrawal from international financial institutions.
The risks, he said, include the tightening of credit conditions, the worsening of trade finance conditions and a decline in the willingness to supply international trade finance in Africa despite increasing demand.
In September, Afreximbank obtained a $300 million loan from the Export-Import Bank of China (China Exim Bank) to facilitate trade financing between Africa and the rest of the world.
The five-year syndicated loan, which was only open to investors based in China or Taiwan, should help Afreximbank achieve its objectives, particularly in terms of reducing the cost of financing.