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Bridging the trade finance gap: The answer to uncertainty for SMEs

To help address the unmet demand for trade finance, the African Development Bank has approved a support facility totalling $300 million.

Owners of small business experience the most difficulties in accessing trade finance. Picture: Primedia

The gap in trade finance is growing at a rapid rate. If Africa wants to unlock intra-Africa trade and meet Africa’s economic prospects in key economies, this trade finance gap must be addressed.

In 2014 the African Development Bank conducted a study to determine the extent to which trade finance requirements were not being met. The study found that at that time, the deficit was close to $120 billion, which amounted to 25% of the total trade finance demand.

We have a role to help address this gap in trade finance because if you address the gap in trade finance, you're doing more trade employment in SMEs.

Vinod Madhavan, group head: trade - Standard Bank Group

To help address the unmet demand, the African Development Bank approved a support facility.

The funding, totalling $300 million, aims to boost the trade operations of African corporates and enable buyers and suppliers to find counterparts in the SME sector – a sector that generates up to 90% of employment.

If the SME sector does more business, it means more employment.

Vinod Madhavan, group head: trade - Standard Bank Group

For the owner of a small business - who experience the most difficulties in accessing trade finance – plugging the massive gap will be particularly significant and will have a life-changing impact, not only on the SME owner but employees alike.

Click here to read more from the Driving Africa’s Development archive.

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Listen to the full conversation between EWN's WEF Africa correspondent Arabile Gumede and Vinod Madhavan, group head: trade - Standard Bank Group below.