African Trade Finance Sees $5bn in Portfolio Outflows in Q1 2020 Due to COVID-19

Proshare

Friday, April 23, 2021 / 12:20 PM  / By AfDB / Header Image Credit: AfDB


Proshare Nigeria Pvt. Ltd.


The survey was conducted by African Export-Import Bank, jointly with the UN Economic Commission for Africa and the African Development Bank-hosted Making Finance Work for Africa Partnership

 

Constrained global financial conditions caused by Covid-19 have led to massive portfolio outflows from Africa, exceeding $5 billion in the first quarter of 2020, a new continent-wide survey on trade finance has shown. About $3.1 billion left the South African market alone, the report found.

 

Launched on 15 April 2021, the African Trade Finance Survey Report examines how trade finance has evolved during the Covid-19 pandemic and highlights the role it can play in overcoming the social and economic fallout of the disease. The survey was conducted by African Export-Import Bank (Afreximbank) jointly with the UN Economic Commission for Africa and the African Development Bank-hosted Making Finance Work for Africa  Partnership.

 

At the launch, Professor Benedict Oramah, President of Afreximbank, said a growing number of international banks were becoming even more reluctant to take on payment risks in countries where economic conditions were deteriorating.

 

"These massive capital outflows strained African banks, many of which recorded sharp drops in their net foreign assets. This further exacerbated liquidity constraints and undermined the capacity of banks to finance African trade," he said.

 

The survey covers the first four months of 2020, including April, when global trade recorded its largest contraction on record. It aims to inform the design of interventions to address market challenges and effectively engage African financial institutions, trade finance intermediaries, regulatory authorities, and national authorities to accelerate efforts to bridge the region's trade finance gap.

 

The report made numerous recommendations, including greater engagement between central banks and the industry, a push for increased digitalization and uptake of new technologies, and better data.

 

Despite the many challenges that came along with Covid-19, some opportunities also arose, the report noted. In fact, a few African countries' economies showed strong resilience and expansion during the pandemic primarily due to their ability to be agile and to digitalize swiftly over the period.

 

To mitigate the significant outflows and mobilize for recovery, Vera Songwe, Executive Secretary at the UN Economic Commission for Africa, urged African leaders, especially Central Bank Governors and Finance Ministers and development partners, to further support institutions such as Afreximbank through capital increases and deploy more resources towards Africa's recovery. 

 

Mervat Soltan, Chairperson and Managing Director at the Export Development Bank of Egypt, said the Bank had seen a significant increase in its digital services during the pandemic downturn. "Digitalization, which sustained business and trade growth during the pandemic, offers a great opportunity to help reduce costs and increase the use of trade finance facilities, and should become an integral part of the strategy to boost African trade post-Covid-19," she added.

 

One way to boost African trade is through the African Continental Free Trade Area (AfCFTA), which the UN's Economic Commission for Africa estimates can improve intra-Africa trade by over 50%. Bola Adesola, Senior Vice Chairman for Africa at Standard Chartered, said the AfCFTA can provide an ideal platform to help drive new businesses on the continent, which will help accelerate trade.

 

Download Full PDF Report Here


Proshare Nigeria Pvt. Ltd.

 

Related News

  1. AFCFTA Offer Significant Opportunities for the Nigerian Private Sector to Expand
  2. Dangote Vs BUA; The Sugar Wars Unredacted
  3. Trade Hub Launches a Virtual DealRoom Connecting Investors to Fast-Growing Impact Businesses
  4. AfCFTA Agreement: Riding Through Phases
  5. Economic Diversification: Emefiele Woos WTO Says Nigeria Needs Help to Reset Its Economy
  6. How Nigeria Can Benefit From WTO
  7. Ecobank Reiterates Its Commitment As "The Partner Of Choice For Export Trade"
  8. NBCC Trade Expo: Nigeria Committed to Increasing Trade Relations with the UK
  9. Ecobank Partners NEXIM Bank, Unveils Trade Opportunities for Exporters
  10. Ngozi Goes to WTO - OpEd by Dr Reuben Abati
  11. DG Elect Dr. Ngozi Okonjo-Iweala Expresses Gratitude to the WTO General Council
  12. Dr. Ngozi Okonjo-Iweala, New WTO DG: The Uneven Road to Co-Opetition
  13. NIPC Releases Report of Investment Announcements, 2020
  14. Revised Trade Policy Vital to Attracting Investments into Nigeria - Wilson Erumebor
  15. US Expresses Strong Support for Dr. Ngozi Okonjo-Iweala as Next DG of WTO
  16. Enoh T. Ebong Appointed as USTDA Acting Director
  17. AfCFTA: Access Bank Targets Becoming Largest Financial Services Aggregator In Africa
  18. AfCFTA: Ecobank is Well-Positioned to Make Payments Smooth - Ade Ayeyemi
  19. Maiden Africa Investment Roundtable Discusses Using Technology to Drive Regional Development
  20. African Countries Not Ready to Implement Free Trade from January


Proshare Nigeria Pvt. Ltd.


 Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd. 

READ MORE:
Related News
SCROLL TO TOP