Lower commodity prices and scarcer demand have been pushing some African countries into deeper recessions, especially those heavily depending on the export of metals and oil. According to GTR the risk of sovereign default has grown across countries in Africa because of currency risk and higher debt levels. In such a challenging environment, trade finance executives have urged MDBs (Multilateral Development Banks) to “intervene decisively” and increase risk appetite in the continent by providing credit support to banks.
Policy makers and development organisations are striving to help sub-Saharan African countries to be resilient in these challenging times. It is vital for both economic and social survival of millions of Africans to keep flowing trades of goods and services. Prior to the pandemic, the trade finance gap in Africa was already estimated to be above $100 billion.
Three months ago Mitigram launched Open Market Discovery, the trade finance match-making platform that allows corporations to connect and build new relationships with financial institutions with risk appetite in emerging geographies. Today we are noticing a growing trend in trade finance requests for quotation in both the MENA and sub-saharan region, accounting for 21.22% and 10.87% respectively, of all the transaction volume negotiated through Open Market Discovery. Collectively, nearly 1 in 3 new trade finance “discovery” initiated on Mitigram's platform targeted Africa and the Middle East.