Financing Trade: Financing Structures. Is MENA Lagging Behind on Liquidity Crisis?

Moderator: Hamed Hassouna Chief Regional Director of Union De Banques Arabes Et Francaises (UBAF) PANELISTS: BISHR SHIBLAQ Head of Office, Arendt & Medernach DR. YASSER RAGAB The Arab Investment & Export Credit Guarantee Corporation “Dhaman” MORCIAD CHAPARIRA Manager, Trade Finance Department, Afreximbank MOHSEN RASHAD, General Manager, Head- Financial Institutions, Arab African International Bank MARK SMYTH Chief Investment Officer, Tawreeq Investments

DISCUSSION TOPICS How big is the impact on trade as bank ration finance – is the opportunity valid for Islamic Trade Finance to expand Does alternative finance have an increasing role to play, particularly within the SME sector, and how do the different offerings compare Macro risk and FX volatility impact of financial institutions and trade in the region Do local laws support expansion of alternative finance providers to set up in the region Have concerns over liquidity signalled a potentially increased role for credit insurance

World Trade Structure & Trends Economies by size of merchandise trade, 2014 51%, The top 10 traders in merchandise trade accounted for a little over half of the world’s total trade in 2014 41% Developing economies had a 41% share of world merchandise trade in 2014 US$ 18.0 tn Merchandise exports from WTO members totaled US$ 18.0 trillion in 2014 Economies by size of trade in commercial services, 2014 US$ 4.87 tn Exports of commercial services from WTO members totaled US$ 4.87 trillion in 2014 34% Developing economies accounted for 34% of total trade in commercial services in 2014

World Trade Structure & Trends

World Trade Structure & Trends

Middle East liquidity challenges MENA region facing unusual political & economic developments impacting the region’s financial position; The Arab spring and consequent political tensions in the region hitting sources of liquidity & hampering both portfolio & direct foreign investments; Low oil prices continue to pressure the funding environment of banks across GCC countries; Overall deposit growth slowing significantly down to 3% in 2015 from 10% 2014; Despite Liquid Assets represents 20%-25% of banks total assets in the GCC still it is expected to decline by 20% during 2016 than 2015, which will lead to increased cost of funds of the banks; Despite of slower credit growth in the region that is driven by lower GDP growth rates, still impact loan performance still limited and banks capital base remain robust; GCC are increasingly financing fiscal deficits through banks that is supportive to banks solvency given sovereigns high credit quality & high yields associated, however, still government borrowing crowding out private sector borrowing;

World Trade Structure & Trends Economies by size of merchandise trade, 2014 51%, The top 10 traders in merchandise trade accounted for a little over half of the world’s total trade in 2014 41% Developing economies had a 41% share of world merchandise trade in 2014 US$ 18.0 tn Merchandise exports from WTO members totaled US$ 18.0 trillion in 2014 Economies by size of trade in commercial services, 2014 US$ 4.87 tn Exports of commercial services from WTO members totaled US$ 4.87 trillion in 2014 34% Developing economies accounted for 34% of total trade in commercial services in 2014