At a pivotal meeting of the World Bank Group and International Monetary Fund, WTO Director-General Ngozi Okonjo-Iweala emphasized the urgent need to improve access to trade finance, especially for small businesses, to facilitate their integration into global supply chains. Speaking at the event, which also involved the International Finance Corporation (IFC), Okonjo-Iweala presented a compelling argument for bolstering the financial support mechanisms essential for diverse and inclusive global commerce.
Based on meticulous studies conducted by the WTO and IFC, Okonjo-Iweala revealed significant challenges faced by traders in regions like West Africa and the Mekong, where prohibitive costs and high rejection rates hinder access to essential trade financing. She particularly underscored the difficulties encountered by small-scale and women-led businesses, illustrating the disparity with advanced economies where trade finance supports 60-80% of trade activities.
Okonjo-Iweala passionately advocated for reducing the barriers to trade finance, proposing a paradigm where financial institutions, particularly development banks, play a pivotal role in bridging the existing gaps. She lauded their efforts during the pandemic and encouraged further mobilization of resources, emphasizing their collective capacity, currently valued at USD 40 billion, as a transformative force in global trade finance.
Highlighting the intricacies of global commerce, where supply chains are central, Okonjo-Iweala underscored the necessity of improving localized financial support structures, citing a noticeable lack of supply chain finance in several studied regions. This deficit, she remarked, places significant financial strain on smaller, local producers, hampering their participation in broader marketplaces.
Supporting Okonjo-Iweala’s perspectives, IFC Managing Director Makhtar Diop expressed a commitment to overcoming the highlighted challenges, emphasizing the impact of trade financing as essential, sometimes even surpassing direct investments. He conveyed a dedicated focus on enhancing working capital and funding access, particularly for businesses in economically challenged regions.
The assembly, comprised of senior officials from major multilateral development banks, fostered a collaborative environment where strategies for enhancing capacity, reducing finance gaps, and strengthening local supply chains were thoroughly discussed and deliberated.
Okonjo-Iweala concluded by expressing gratitude for the committed efforts in the realm of trade finance, urging for intensified collaboration and strategic focus in areas such as supply chain finance and green finance, setting the stage for a collective review at the WTO Aid for Trade Global Review in June 2024.
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