However, bureaucracy and inadequate research are two major challenges dogging the sector and will require immediate attention if progress is to be realised in the industry.
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“Traders intending to sell their products in trade finance space as well as exporters in the market often make the mistake of entering the market without having done enough research. It is important for investors to understand various nuances like different trade control regimes and understand how to obtain foreign currency among others,” Minos Gerakaris, head of trade and finance at Rand Merchant Bank told CNBC Africa.
Gerakaris added that new investors coming into the African continent make the mistake of assuming that Africa is a single country and not diverse. This is caused by lack of research.
“Prospective investors should always undertake a due diligence exercise, get more understanding from local partners and also assess the situation on the ground as to have a thorough appreciation of the industry,” he added.
Bureaucracy is one of the challenges in the sector but there has been positive developments in the continent.
“Angola has made great strides in cutting bureaucracy and the same with Mozambique. Ten years ago in Angola for example, one would see about 80 ships waiting to dock but that number to date has been reduced to about 15 at a time “.
As the continent moves forward extending working capital facilities in the sector will be of necessity together with injecting the much needed liquidity in the working cycle.
Last March, South Africa hosted a conference on trade finance in the continent and discussed among others thriving markets attracting interest such as Ethiopia, Ghana, Mozambique, Namibia, Tanzania and Zambia.
BY TRUST MATSILELE