The World Trade Organization (WTO) announced that Director-General Ngozi Okonjo-Iweala addressed the annual meeting of the World Bank Group and International Monetary Fund, underscoring the need to enhance trade finance accessibility for small businesses to facilitate their inclusion in global supply chains. Okonjo-Iweala stressed the crucial role of trade finance in fostering widespread engagement in global trade and called upon multilateral development banks to intensify their endeavors in bridging the finance gap between demand and supply according to a press release by the WTO.
"The event was co-hosted by International Finance Corporation (IFC) Managing Director Makhtar Diop," stated the World Trade Organization.
During the meeting, Director-General Okonjo-Iweala summarized recent WTO-IFC studies on West Africa and the Mekong region, exposing significant trade finance challenges for small and women-led businesses in global trade. The studies revealed that high rejection rates, exceeding 40%, and costly application processes discourage these traders from seeking financial support from banks.
"Only up to 25% of trade is supported by trade finance in these regions, compared to 60-80% in advanced economies," said Director-General Okonjo-Iweala. However, calculations by WTO economists show that "raising the trade coverage from 25% to 40% would increase annual trade flows by an average of 8%, reaching 80% in 10 years."
The Director-General also emphasized the immediate necessity for enhancing the accessibility of supply chain finance, highlighting that half of worldwide trade relies on supply chains.
Representatives from major multilateral development banks, such as the African Development Bank, the African Export–Import Bank, the Asian Development Bank, the Bank for International Settlements, the European Bank for Reconstruction and Development, and the International Islamic Trade Finance Corporation of the Islamic Development Bank, took part in the event.
Improving trade finance accessibility for small businesses is crucial for their inclusion in global supply chains and fostering widespread engagement in global trade. The WTO, under the leadership of Director-General Okonjo-Iweala, is calling upon multilateral development banks to intensify their efforts in bridging the finance gap between demand and supply. Increasing trade coverage from 25% to 40% could significantly boost annual trade flows and reach 80% within a decade. Enhancing the accessibility of supply chain finance is also a priority, as half of worldwide trade relies on supply chains. The participation of major multilateral development banks in the annual meeting further emphasizes the importance of addressing trade finance challenges and supporting small businesses in global trade.