Improving the SMEs Access to Trade Finance DRAFT
in the OIC Member States
68
Figure 25: Africa Foreign Investment Flows
Source: UNCTAD/AfDB and IMF, 2011
Private sector development and inclusion initiatives are important aspects of an overall
development approach to Africa, and trade, as well as support to SMEs and micro-enterprises,
is a dimension of these key areas of focus.
A healthy, efficient and stable financial sector remains the cornerstone of a private
sector–led development strategy. African firms need affordable trade credit. In response
to the collapse of commercial financing since the global financial crisis, the Bank piloted
a trade finance initiative. Its lessons, and those of other multilateral institutions with
similar initiatives, have informed an operational trade finance program focusing on
agriculture, smaller enterprises and higher risk markets as primary beneficiaries.
Source: African Development Bank Group Strategy 2013-2022
Aid for Trade initiatives in Africa are an area of significant focus and elements of these
programs relate directly to the need for liquidity and trade finance.
“…with sound infrastructure, transport costs could be reduced by 40% for coastal
countries and by 60% for land-locked countries. They also estimate extent to which
transport costs reduce trade volumes. An increase of 10% in transport costs has been
estimated to result in a 20% reduction of trade…”
Source: Global Review of Aid for Trade, UNECOA, 2009 (Extract)
Several large-scale projects co-funded by the African Development Bank cite as expected
benefits, the creation of local supply chains to which SMEs and micro-enterprises can link up,
as a means of generating revenue and creating local economic value. This notion of active
development of supply chain connections is common to the thinking of leading financiers
across the globe, particularly as a means of facilitating SME access to trade flows and trade