African Development Bank: $110 million of unmet trade finance

The value of unmet demand for bank-intermediated trade finance in Africa is estimated to range from US $110 billion to US $120 billion, which is significantly higher than estimated earlier figures of about US $25 billion. These figures suggest that the market is significantly underserved, says the ‘Trade Finance in Africa’ report, published by the African Development Bank (AfDB).

The report is based on a unique survey of the trade finance activities performed by 276 commercial banks across 45 countries in Africa.

The report was compiled to find out more about the size of the African trade finance market, the variations across sub-regions, the scale of financing gap, the trade finance devoted to intra-African trade, the relative importance of on-balance sheet versus off-balance sheet financing, and constraints faced by banks in meeting the demand for trade finance.
The survey reveals the main constraints are limited US dollar availability – the dollar being by far the dominant currency in international trade and trade finance and insufficient limits with confirming banks for confirming letters of credit.

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