The World Trade Organization (WTO) and the International Finance Corporation (IFC) recommend more investment in trade in West Africa and a sustained effort to reduce the costs associated with this product. This is the final note of the report of a joint study published by the two institutions in October 2022 and presented this Tuesday, November 29, 2022 to the press in Lomé. It is on the sidelines of the African Financial IndustrySummit which is in its second edition held in the Togolese capital.
The study conducted by the IFC and the WTO indeed examined the main obstacles to trade finance in the four largest economies of the West African sub-region. That is to say the Ivory Coast, Ghana, Nigeria and Senegal. But whose “results can be transposed to all the countries of the sub-region”, specifies Nathalie Louat, director of Trade Financing and the Supply Chain, interviewed by the Anadolu Agency.
“It should be noted that we work on the whole of the West African region. Not just in the four countries covered by the study. So we really know the realities of the market. And we think that in these four countries where there are big banks and small banks, the problems can be transcribed into what is happening in the smaller countries, ”she justifies.
The joint report of the IFC and the WTO (Trade finance in West Africa) therefore surveyed almost all the financial institutions that provide trade finance in Côte d’Ivoire, Ghana, Nigeria and Senegal.
Most importantly, he conducted in-depth background analysis of the performance of importers and exporters and developed forward-looking scenarios to study the effects of improving access to affordable trade finance.
“In these four countries, we realize that there is a need for more financing for foreign trade but also a need to reduce costs. We believe that the need is very clear and that local financial institutions in these four countries need support to offer more trade finance. And finally on the costs, we estimate that they are 2 to 4% of the value of financial transactions, whereas in the rest of the world, they are around 1%”, explained Nathalie Louat.
Nathalie Louat explained that the high rate of financial transactions observed in West African countries, particularly in these four countries concerned by the Trade Finance in West Africa report “is due to the absence or the need to develop more relationships between local commercial banks and international banks regarding letters of credit in particular”.
“To deal with all these situations, we must expressly emphasize the development of more relations between local commercial banks and international banks which are specialists in this type of product. It is important to deepen commercial relations between the smaller banks and the larger ones. It is really a problem wherever you are in the whole West African sub-region,” she concluded.
Following the recommendations, the IFC and the WTO intend to continue working to strengthen the capacities of the various old and new commercial banks. The two structures also intend to continue the regular dissemination of information within all West African banks to accelerate the implementation of these recommendations.
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