In a move to remove the impediment to accessing finances by Small Medium Enterprises (SMEs) in Africa, Absa, a pan-Africa financial institution has said it will drive trade financing across the continent by providing digital solutions.
The Head, Trade Finance and Financial Institutions Trade Sales at Absa, Oladapo Adeigbe, who stated this via an article he wrote recently, said it identified trade financing as critical financial issue as it has the capacity to deliver higher impact in Africa in particular.
According to Absa, there should be increased value proposition around trade financing, likened it to the oil that greases supply chains and ensures that buyers are sellers fulfil their obligations.
The bank noted that digitisation is a key enabler in democratising trade finance in which the pandemic has accelerated the need for wider adoption of digital trade finance solutions by SMEs and corporates.
Some of the impediments to accessing financial products by SMEs as highlighted in the article is the fact the much of the trade finance sector is still very paper-driven with manual processes slowing down access to finance.
“Financial inclusion across Africa is yet to peak as most SMEs operate in the informal sector and are largely unbanked. Hence, their viability cannot be ascertained or assessed directly by financial institutions,” it argued.
The bank posited that to digitize trade finance, the entire ecosystem needs to support and participate in re-imagining how it unlocks value. This includes integrating activities of all role players; the regulators, the logistic companies, banks and other non-bank financial institutions (e.g., fintechs) Fintech innovators, which will eventually drive the Digital Trade Ecosystem.