African Development Bank joins World Trade Organisation (WTO) and other Multilateral Development Banks (MDB)s to support trade finance amid COVID-19 crisis

Content provided by APO Group. CNBC Africa provides content from APO Group as a service to its readers, but does not edit the articles it publishes. CNBC Africa is not responsible for the content provided by APO Group.
Download logo

The African Development Bank Group (www.AfDB.org) has joined the World Trade Organisation and other multilateral development banks to reduce trade finance gaps that emerge as a result of the COVID-19 pandemic.

In a joint press release (https://bit.ly/38lkzjl) issued 1 July 2020, the institutions said they would prioritize their support to areas in the world where such support is needed most, particularly the poorest countries.

Since the beginning of the COVID-19 outbreak, multilateral development banks have stepped up their trade finance programs to support essential imports and key exports, as international correspondent banks have cut lending in many countries. In addition to the ongoing shocks to supply and demand, international trade has been affected by a reduction in the supply of trade finance. Risk perceptions about non-payment in international trade are at the highest levels in a decade and banks are increasingly reluctant to take on payment risks in many countries where economic conditions are deteriorating.

Facilitating trade in medical supplies has been a significant part of these support packages.

With the approval of its $10 billion Covid-19 Rapid Response Facility (CRF) in April 2020, the African Development Bank is providing up to $1 billion in trade finance liquidity and risk mitigation support to local banks in all 54 eligible African member countries.

More support will almost certainly be necessary in the weeks and months ahead, as the steep decline in the real economy starts to impact the financial system through loan defaults and corporate bankruptcies. Many developing countries were experiencing significant trade finance shortages even before the COVID-19 crisis; now they face even tighter access to trade credit.

A further decline in trade finance supply would, in the short term, make it harder for imports of food and medical equipment to reach economies where they are urgently needed. In the medium-term, it would impede the ability of trade to help drive economic recovery.

Insufficient trade finance threatens to compromise otherwise viable trade transactions, disproportionately affecting micro, small, and medium-sized enterprises (MSMEs), which account for the bulk of employment in Africa.

“We share the concerns being expressed in markets, and will work within our respective remits to make trade finance available through this difficult period, just as we did during the global financial crisis of 2008-10,” the joint statement said.

You can learn more about the African Development Bank’s Trade Finance Program at: https://bit.ly/2NP1FYr.

Distributed by APO Group on behalf of African Development Bank Group (AfDB).

Media Contact: Amba Mpoke-Bigg Communication and External Relations Department African Development Bank Email: [email protected]

About the African Development Bank Group: The African Development Bank Group (AfDB) (www.AfDB.org) is Africa’s premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). On the ground in 44 African countries with an external office in Japan, the AfDB contributes to the economic development and the social progress of its 54 regional member states. For more information: j.mp/AfDB_Media


Partner Content

THE FUTURE JUST ARRIVED: THE ROLE OF BANKS IN A POST-COVID WORLD

THE COVID-19 GLOBAL pandemic has brought forward the future. It has brought about humanity’s biggest challenge in a century, to choose between...

Mauritius-Africa, a partnership for shared prosperity

By: Mathieu Mandeng In the current complex and challenging circumstances that are testing the...

VIRTUAL VDJ EXPOSES LOCAL CREATIVE AND ENTERTAINMENT INDUSTRY

The City of eThekwini pulled out all stops to give fans of the annual Vodacom Durban July (VDJ). The Virtual Vodacom Durban...

GAUTRAIN – Why It Matters

Economic growth continues to be one of the focus areas for the Gauteng Provincial Government (GPG) and the Gautrain responds to that...

Trending Now

Egypt’s annual urban consumer price inflation fell to 4.2% in July – CAPMAS

CAIRO (Reuters) - Egypt’s annual urban consumer price inflation fell to 4.2% in July from 5.6% in June, the central statistics agency...

Can These Companies Solve The Plastic Waste Problem?

Plastics are useful. They're used to help make lifesaving medical supplies, lightweight, fuel-efficient car parts, and insulation for our homes. But nearly half of all plastic produced goes towards single-use items such as bags, straws, utensils and

South Africa’s Denel tells unions it can’t honour court ruling on salaries

JOHANNESBURG (Reuters) - South Africa’s struggling state defence firm Denel told trade unions on Friday that it cannot honour a court ruling...

Botswana diamond exports fall by two thirds on COVID-19

GABORONE (Reuters) - Botswana’s rough diamond exports plunged 68% percent in the second quarter of the year, data published by the central...

Subscribe to our newsletter

Sign up for free newsletters and get more CNBC AFRICA delivered to your inbox

- Advertisement -