Indradi Soemardjan’s Post

The International Finance Corporation (IFC) and HSBC have announced a $1 billion risk-sharing facility designed to boost trade financing for banks in emerging markets across Africa, Asia, Latin America, and the Middle East. The partnership, established under IFC’s Global Trade Liquidity Program, will equally distribute risk across a portfolio of trade-related assets, targeting 20 countries with critical economic development needs. Aditya Gahlaut, Co-Head of Global Trade Solutions at HSBC Asia Pacific, described trade finance as “the fuel that powers the global economic engine”, emphasising the initiative’s potential to support job creation and economic growth. The move addresses a global trade finance gap estimated at $2.5 trillion, with demand far outstripping current supply. Global trade has consistently grown by an average of 5% annually over the past three decades. Mohamed Gouled, IFC’s Vice President of Industries, highlighted the facility’s role in driving economic development, while Riccardo Puliti, IFC’s Regional Vice President for Asia Pacific, stressed the importance of improving financing access for importers and exporters. The Global Trade Liquidity Program has historically supported over $80 billion in global trade through nearly 30,000 transactions. The program has worked with more than 400 financial institutions in 74 emerging markets, including 28 IDA and seven fragile and conflict-affected countries (FCS). The majority of importers and exporters supported are small- and medium-sized enterprises (SMEs). Source: https://lnkd.in/eKbNeXPq

The Critical Role of Trade Finance in Driving Global Economic Growth Trade finance is the engine behind the vast majority of global trade, supporting 80-90% of international transactions. This essential financial service is not just about facilitating trade; it’s about enabling global economic development, especially in regions where access to finance can be a barrier to growth. Why Trade Finance is Indispensable: - Catalyst for Economic Growth: Trade finance allows businesses, especially in developing regions, to access new markets, scale operations, and drive economic growth. For instance, in Asia and Africa, where trade finance gaps are significant, the ability to secure financing directly impacts GDP growth and employment. - Mitigating Trade Risks: In international trade, risks such as payment defaults and political instability can deter business. Trade finance instruments like Letters of Credit (LCs) and Bank Guarantees (BGs) mitigate these risks, ensuring that trade continues even in volatile environments. - Empowering SMEs: Small and medium enterprises (SMEs) are the backbone of many economies, particularly in emerging markets. However, they often face challenges in securing the financing needed to engage in international trade. Trade finance bridges this gap, allowing SMEs to expand their reach, contribute to local economies, and participate in global supply chains. Key Statistics: - The global trade finance gap stands at approximately $1.7 trillion, with Asia accounting for nearly 40% of this deficit. This gap represents missed opportunities for businesses and economies alike. - In 2022, Export Credit Agencies (ECAs) supported $211 billion in trade finance, with a significant focus on emerging markets, highlighting the critical role of public institutions in facilitating trade where it’s needed most. The Future of Trade Finance: As the global economy continues to evolve, the role of trade finance will become even more critical. Innovations such as digital platforms, blockchain, and enhanced credit assessments are set to make trade finance more accessible, particularly in underserved regions. These advancements will help close the trade finance gap, unlocking new growth opportunities worldwide. Conclusion: Trade finance is not just a financial tool; it’s a strategic lever for global economic development. By enabling businesses to mitigate risks and access new markets, trade finance plays a vital role in fostering economic growth, reducing poverty, and promoting global stability. #TradeFinance #GlobalEconomy #EconomicGrowth #SMEs #EmergingMarkets #TradeFinanceGap

The Critical Role of Trade Finance in Driving Global Economic Growth Trade finance is the engine behind the vast majority of global trade, supporting 80-90% of international transactions. This essential financial service is not just about facilitating trade; it’s about enabling global economic development, especially in regions where access to finance can be a barrier to growth. Why Trade Finance is Indispensable: - Catalyst for Economic Growth: Trade finance allows businesses, especially in developing regions, to access new markets, scale operations, and drive economic growth. For instance, in Asia and Africa, where trade finance gaps are significant, the ability to secure financing directly impacts GDP growth and employment. - Mitigating Trade Risks: In international trade, risks such as payment defaults and political instability can deter business. Trade finance instruments like Letters of Credit (LCs) and Bank Guarantees (BGs) mitigate these risks, ensuring that trade continues even in volatile environments. - Empowering SMEs: Small and medium enterprises (SMEs) are the backbone of many economies, particularly in emerging markets. However, they often face challenges in securing the financing needed to engage in international trade. Trade finance bridges this gap, allowing SMEs to expand their reach, contribute to local economies, and participate in global supply chains. Key Statistics: - The global trade finance gap stands at approximately $1.7 trillion, with Asia accounting for nearly 40% of this deficit. This gap represents missed opportunities for businesses and economies alike. - In 2022, Export Credit Agencies (ECAs) supported $211 billion in trade finance, with a significant focus on emerging markets, highlighting the critical role of public institutions in facilitating trade where it’s needed most. The Future of Trade Finance: As the global economy continues to evolve, the role of trade finance will become even more critical. Innovations such as digital platforms, blockchain, and enhanced credit assessments are set to make trade finance more accessible, particularly in underserved regions. These advancements will help close the trade finance gap, unlocking new growth opportunities worldwide. Conclusion: Trade finance is not just a financial tool; it’s a strategic lever for global economic development. By enabling businesses to mitigate risks and access new markets, trade finance plays a vital role in fostering economic growth, reducing poverty, and promoting global stability. #TradeFinance #GlobalEconomy #EconomicGrowth #SMEs #EmergingMarkets #TradeFinanceGap

The global trade finance ecosystem, valued at $5.2 trillion, has a $1.7 trillion financing gap, worsened by the COVID-19 pandemic. Micro, small, and medium-sized enterprises (MSMEs) are especially impacted, with 40% facing rejection for trade finance. To address this, solutions like digital technologies, public-private partnerships, alternative financing models, and increased financial inclusion are needed to make trade finance more accessible, particularly for underserved businesses. A good breakdown of some pain points mutually shared across MSME's in the global trade market in recent years.

Did you know that the global trade finance gap is a staggering $1.7 trillion? Small and medium-sized enterprises (SMEs) in the Caribbean, which make up over 95% of the region’s companies and contribute 40% to its GDP, are hit the hardest. Yet, only 13% are engaged in export activities. 🌍💼 In our latest blog post, we dive into the critical challenges these SMEs face in accessing trade finance and explore how commercial banks and innovative policies can bridge the gap. ✨ 🔗 https://bit.ly/4dL0R0X

#MFW4AWebinarSeries Earlier this week together with the African Development Bank Group and in collaboration with the Africa Regional Committee (ARC) of the @International Trade and Forfaiting Association (ITFA), Making Finance Work for Africa (MFW4A) hosted a special Trade Finance Banking seminar aimed at African trade finance professionals in West and Central Africa regions themed: "The Evolving Landscape of Trade Finance in West and Central Africa Regions". The purpose of this seminar was to foster a better understanding of global developments in trade finance and the implications for trade finance markets in the region. In his opening remarks, Mr. Ahmed Rashad ATTOUT Director Financial Sector Development AfDB, expressed his appreciation for the enthusiasm of the more than 500 participants attending the workshop, and highlighted the relevance of the themes discussed. As he noted, trade finance in Africa continues to face a significant gap, estimated at over $100 billion. This gap restricts the financing capacity of companies involved in international trade. Key challenges to trade finance in Africa include limited access to dollar-based financing and complex regulatory environments. The seminar addressed these issues, emphasizing not only the risks but also the opportunities: --> In the first session, Mali Aurelien, VP and Senior Credit Officer at Moody's, gave a comprehensive presentation on the risks and challenges of accessing funding. While funding issues are critical, potential solutions were also discussed. Mr. Ahmed Attouy highlighted initiatives such as the AfDB Trade Finance Facilitation Program, which has supported over $12 billion in trade finance transactions as of June 2024. --> In the second session, Dr. Tedd George from IFTA demonstrated how technology and digitalization, when properly applied, can offer sustainable solutions by enhancing trust, efficiency, and data availability to address the challenges identified. ---> In the last session, Mrs. Fungai Nyamahowa from African Export-Import Bank (Afreximbank) underscored the importance of compliance, while highlighting key initiatives taken by AfreximBank to tackle these challenges through capacity building, advocacy, and information sharing. We are proud to partner with AfreximBank on several of these initiatives. Additionally, Mrs. Cada DJENZOU shared practical and insightful solutions to address the challenges in trade finance. We trust The conversation and dialogues held by the dynamic group of speakers and participants will serve to bring innovation and build fruitful partnerships to scale up trade finance in Africa. This is precisely what MFW4A, as a leading platform for knowledge, advocacy, and cooperation on financial sector development in Africa, stands for. If you missed it, catch the replay now! 📽 https://lnkd.in/eNK-EXTJ #trade #AFTCA #tradefinance KAMEWE Tsafack HUGUESMarina Finken Lamin M Drammeh Aïcha O. Francis Kemeze Camilla Kaijuka

African Development Bank and Trade and Development Bank (TDB) Group strengthen trade finance partnership through a Trade Finance Unfunded Risk Participation Agreement https://lnkd.in/eRe_TR4M

HSBC and the World Bank's International Finance Corporation will jointly provide funding to trade transactions valued at up to $1 billion, in hopes of filling the gap in financing for emerging market trade, writes Reuters.

What we're reading - global trade finance snapshot: 'It’s a line committed to memory at this point, repeated to the point of numbness: the trade finance gap has risen to $2.5 trillion. But its adverse impact should be noted: trade finance is more readily available in developed regions. The World Trade Organisation’s (WTO) 2024 World Trade Report finds that the share of trade supported by trade finance in developed economies is at least 60%. In contrast, the average share of trade supported by trade finance in the African continent was 40%, despite the inclusion of economies as large as Egypt, Morocco, and South Africa. In Senegal, Nigeria, and Vietnam, around 15-20% of trade is supported by trade finance, while in Cambodia and Laos, it’s only 3%. The gap is not due to a lack of want. Rejection rates in low-income areas are staggering, reaching 25% of the value of requests in West Africa (and 12% for the continent as a whole).' #Africa #trade #tradefinance #commmodities #growth #development