Lack of financing capacity SADC's biggest obstacle

Over 70% of respondents to the FTW Trade Finance survey identified a lack of financing capacity as one of the biggest obstacles to obtaining trade finance within the Southern African Development Community (SADC). Political and social instability in certain SADC countries also exacerbates the problem as this affects a country’s credit rating, said Khalid Varela Samamad, process and projects manager at J&J Mozambique. Nkosinathi Nkonde, customs specialist at the Altron group, noted that promotion of good governance and regulations from governments could considerably lift the constraints on institutions’ financing capacity. “Government needs to actually deliver on their promises to make it easier to do business into SADC. There is very little assistance offered to smaller businesses in this regard and unless you do the legwork yourself and cut government out completely, you just don’t get anywhere,” said one export manager who commented anonymously. A senior member of a global import/export company said that the global bodies such as the International Monetary Fund (IMF) and the World Bank needed to be more stringent with countries that had a reputation for government meddling and fraud and corruption. “This will pave the way, eventually, for easier access to trade finance,” he said. Trade finance consultant, Michael Schweitzer, pointed out that his company often relocated risks to other countries to mitigate risk. INSERT 1 Banks vs institutions There is a definite trend emerging where traders are moving away from banks to other financial institutions for their trade financing. Reasons include the fact that financial institutions offer better advice and are more competitive and that banks will invariably look at companies’ balance sheets when lending which is problematic for SMME operations. “Banks have become too costly with their handling fees which provided the gap for other trade houses to offer f lexible services that are easier to work around,” said Nirri Maharaj, director at Marine Container Forwarding.