Director-General of the World Trade Organization (W TO), Ngozi Okonjo-Iweala, has called for the dismantling of financial barriers that impede the participation of small traders in Africa in global trade. Speaking during a recent online workshop, she stressed the importance of financial support for small businesses in Africa and the need for more dialogue between banks, local government agencies, and businesses to enable them to thrive. This is particularly crucial given the impact of the Covid-19 pandemic on the continent's economy, where small to medium enterprises were hit hard.To address this challenge, there is an increasing need for more innovative financing solutions and a conducive environment that enables businesses to thrive. In February, the European Union donated €450 000 to the WTO to fund the participation of government officials from developing countries in training and other trade capacity-building activities, highlighting the importance of strengthening trading know-how in these countries.Okonjo-Iweala has often emphasised the pressing need for trade finance in African countries, stating that the lack of availability of trade finance or its availability at higher costs than the world market are major obstacles to the integration of African countries into world trade. However, trade finance has long been a challenge in sub-Saharan Africa, with banks rejecting around 40% of applications from small to medium-sized enterprises, higher than for any other type of company. According to the African Development Bank, the rejection rate for letters of credit applications increased by at least 30% during the pandemic.To be successful in international markets, countries need to ensure that their logistics, transport, border-crossing, and trade finance costs are competitive. Achieving this requires expertise and training, which eventually reduces transaction costs. Hence, the need for more dialogue, innovative financing solutions, and training to address these challenges and enable small businesses in Africa to participate fully in global trade.
