The Director-General of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala and Managing Director, International Finance Corporation (IFC) Makhtar Diop, have again stressed the importance of increasing access to trade finance for small businesses to assist their integration into global supply chains.

The WTO boss emphasised that trade finance plays a vital role in supporting inclusive participation in world trade and urged multilateral development banks to intensify their efforts towards reducing the finance gap between demand and supply.

Outlining key findings of recent joint WTO-IFC studies in the West African regions, she said the studies revealed significant trade finance difficulties faced by small traders and women-led businesses when seeking to participate in global trade, including rejection rates of over 40 per cent and high costs for making requests discouraged them from seeking financial assistance from banks.

She said that currently, roughly 25 per cent of trade is supported by trade finance in West Africa, compared to 60-80 per cent in advanced economies. She added that raising the trade coverage to 40 per cent would increase yearly trade flows by an average of eight per cent, reaching 80 per cent in 10 years.

Underlining the need to dismantle trade finance barriers to make global supply chains more inclusive and diverse, she applauded the efforts of development banks to support small traders during the pandemic and urged them to harness their financial resources to further empower traders.

Highlighting that half of global trade is conducted via supply chains, she underscored the urgent need to improve the availability of supply chain finance, noting that WTO-IFC studies on trade finance, including one conducted in West Africa, observed a lack of local supply chain finance.

Diop reiterated that the IFC is committed to addressing the critical challenges and will continue to scale up its trade and supply chain finance.