1. Trade Finance in Africa
GTR East Africa Trade & Commodity Finance Conference 2017
Lamin M Drammeh

2. Trade Finance in Africa
AfDB 2016 Survey
Coverage – 49 countries banks
Total bank-intermediated Trade Finance
USD 400 billion (30% of Africa’s trade)
Gap – USD 100 billion
Relatively low risk asset class
NPL of 5% vs 12% for all asset classes
Regional differences in TF NPL levels

3. Trade Finance in Africa
Top confirming banks

4. Constraints to Trade Finance
Source: WTO 2016 Global Trade Finance Survey: Significant/very significant impediments to TF

5. Banks’ Trade Finance Portfolio

6. Is SMEs a risky segment - NPLs?
13%
16%
11%
31%
Africa TF NPLs
SMEs 14%
New Clients 3%
All TF clients 5%
11%

7. Intra-regional Trade Flows
Positive correlation – intraregional trade and development
17.8%
68.5%
50.2%
8.8%
52.3%
17.7%
25.8%
Source: WTO International Trade Statistics 2015

8. Intra-Africa trade finance by region
Positive correlation - Intra-Africa trade finance and regional integration
4.5%
17.4%
25%
Africa
20% of banks’ financing
Net oil exporting countries -10%
Net oil importing countries - 21%
3.6%
24.5%

9. Trade enabling policies, Infrastructure projects, T/As
AfDB in Trade Finance
USD 1 Billion
Trade Finance Program
Risk Participation Agreement
(Guarantees)
Trade Finance Line of Credit
(Liquidity)
Soft Commodity Finance Facility
(Agriculture)
Trade enabling policies, Infrastructure projects, T/As

10. AfDB’s TF Journey so far
Supported more than USD 5 billion of trade in Africa
Guaranteed > 1,300 trade transactions – 49% SMEs
25% of trade transactions supported are intra-Africa
6 active confirming banks • More than 300 Issuing Banks
Coverage - 48 African countries
Conducted 2 continent-wide surveys on TF in Africa

11. What we can do together
To unlock Africa’s huge potential and accelerate economic development and social progress we need to increase access to finance for SMEs and facilitate more trade:
Explore other financing vehicles – Trade funds, insurance companies, Supply Chain Financing, receivables financing
Strengthen the capacity of local banks
Enhance ecosystem collaboration
Blockchain/Fintechs - Ecobank Fintech competition, M-Shwari
Trade facilitation programs of MDBs
More research and thematic studies
Risk Perception management – AML/KYC
Advocacy for conducive regulatory environment
Explore solutions to hard/soft infrastructure challenges