Africa: Expanding access to trade finance is necessary for SMEs
November 29th, 2021 – When it comes to enhancing access to trade finance for African small and medium-sized enterprises (SMEs), current challenges call for innovative solutions.
The African continent represents a market of approximately 1.2 billion people – most of whom are under the age of 30 – and a collective GDP of $2.5trn, but currently accounts for a small portion of global trade (2%). Intra-Africa trade is also low, about 18% of the total for the continent, representing a missed opportunity for African businesses.
The majority of trade participants in Africa are SMEs. In 2020 alone, sub-Saharan Africa was home to 44 million micro, small, and medium enterprises, which provide an estimated 80% of jobs across the continent.
Due to their smaller size and sometimes less formal procedures – including lack of digitization, audits, and credit history – these firms often struggle to secure the financing they need to scale trade operations effectively, holding back both their own development and that of the economy overall.
Written by The Africa Report
Photo: Global Trade Magazine
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