THE PRIVATE SECTOR AFRICA “WE ARE ALL TRYING TO REBOUND” TDB ON THE RECORD
The future of trade finance in Africa and how to close the US$100 billion finance gap By Howard Hudson, OPEC Fund
W hen it comes to global trade, the playing field is far from even. According to UN Trade and Development (UNCTAD), trade between European countries accounts for more than two-thirds (68 percent) of all trade across the continent. In Asia the figure is close to 60 percent while in Latin America and the Caribbean it is around 20 percent. But across Africa barely one-sixth of all trade (16 percent) stays within the region. There are many reasons for this disparity. First, most African exports are primary goods, which limits the options for intra-continental trade. At the same time African countries face high trade costs, complex regulatory environments and generally poor infrastructure (including lack of processing facilities for the abovementioned raw materials). All of which makes trade flows between African nations both expensive and ine ffi cient.
Initiatives like the African Continental Free Trade Area – established in 2018 and ratified by 47 of 54 signatory countries – aim to reduce tari ff s and promote deeper economic integration. Meanwhile, more flexible funding from development finance institutions (DFIs) is easing the liquidity needs of small and medium-sized enterprises (SMEs), allowing them to join the global trade arena. But with Africa’s trade finance gap put at between US$80 and US$120 billion, will such measures ever be enough? To find out more we spoke with Admassu Tadesse, President and Managing Director of the Eastern and Southern African Trade and Development Bank Group (TDB), who in May 2024 was named “African Banker of the Year” on the sidelines of the African Development Bank Annual Meetings in Nairobi.
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