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$120b trade finance gap opens opportunities for banks

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Chief Economist, Africa Export-Import Bank (Afreximbank), Dr. Hippolyte Fofack (left); President, Dr. Benedict Oramah; Governor of the Central Bank of Mauritius, Rameswurlall Basant Roi; and Chairman, State Bank of Mauritius, Kee Chong Li Kwong Wing, during the opening of the Afreximbank’s yearly structured trade finance seminar and workshop, in Port Louis, Mauritius, on Monday.

Chief Economist, Africa Export-Import Bank (Afreximbank), Dr. Hippolyte Fofack (left); President, Dr. Benedict Oramah; Governor of the Central Bank of Mauritius, Rameswurlall Basant Roi; and Chairman, State Bank of Mauritius, Kee Chong Li Kwong Wing, during the opening of the Afreximbank’s yearly structured trade finance seminar and workshop, in Port Louis, Mauritius, on Monday.

• Capacity building raises 1,600 finance professionals
African banks must step up their acts to take opportunities that are now opened in the estimated $120 billion trade finance gap, African Export-Import Bank (Afreximbank) has said.

Besides, the recurring “hot money” (foreign inflows targeted at the capital markets), which creates economic distortion for the continent when withdrawn at the slightest panic and speculation, should be taken over the region’s banking system.

Meanwhile, Ecobank, United Bank for Africa, Bank of Africa and State Bank of Mauritius (SBM), among others, have been identified as pan-African banking institutions that have taken root in the continent today, unlike in the 1980s when there were non.

The President of Afreximbank, Dr. Benedict Oramah, who made the charge on Monday, in Mauritius, said with international banks once again withdrawing from African trade finance, amid huge gap, the region’s players must step in through structured trade finance, to ensure that we never descend into economic chaos because of their action.

In his address at the opening of the bank’s yearly Structured Trade Finance seminar and workshop, Oramah said that unlike in the 1990s, structured trade finance had emerged a well-proven ammunition to deal with the risks.

The risks, he said, include those presented by the environment- the tightening of credit conditions, worsening of trade finance conditions and decline in the willingness to supply international trade finance in Africa despite increasing demand.Oramah however, said that understanding structured trade finance would empower African trade finance professionals to deal effectively and decisively with the challenges confronting the continent.

He commended Mauritius for having successfully built its foundations on trade and for emerging as a global export success, having chosen openness and jettisoned timidity.The bank chief noted that the four pillars of agriculture, tourism, financial services and manufacturing had combined to form a solid and diversified foundation for the economy, saying that the country reminded Africans from commodity dependent economies of “the folly of captivity by commodity illusion”.

Speaking on the success of the seminar, he said that in the 16 years since its introduction, the series had provided training to more than 1,600 African trade finance professionals, including bankers, traders, academics, regulators and others.

But the Chairman of SBM, Kee Chong Li Kwong Wing, predicted a significant rise in the continent’s trade in the coming years and urged African banks to step up efforts to play key roles in that anticipated phenomenon.He said that African banks need to take their destiny in their own hands by working to fill the financing gaps left as a result of the exit of international banks from the continent, stressing that all hands should be on deck for the achievement of that objective.

Also, the Governor of the Central Bank of Mauritius, Rameswurlall Basant Roi, urged region’s lenders to give increased attention to financing small and medium-sized enterprises (SMEs), given the important role they play in economic development.According to the Governor, closing Africa’s trade finance gap required focusing attention on the neglected areas, particularly the SMEs.

The seminar, which ongoing, is featuring speakers from some of the world’s top financial institutions, academic institutions and firms, as well as representatives from Afreximbank, the Central Bank of Mauritius, SBM, the Central Bank of Seychelles, Standard Chartered Bank, Mauritius Banker’s Association and the Loan Market Association.

The participants from 22 countries, include senior executives from African banks and financial institutions, regulatory institutions, hedge funds, Africa country funds and venture capital institutions, corporate entities engaged in trade, manufacturing and privatised infrastructure projects, Afreximbank’s trade finance and project finance intermediaries, African law firms and insurance firms.


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