African trade stands on the cusp of a revolution. As a result of bank-led trade initiatives, regulatory standardisation, new technologies, and fintech partnerships, African trade is now becoming a focus for many global corporates. And for domestic entities, intra-African trade is opening up a host of growth opportunities.
The combination of digitisation and Africa’s market dynamism is one of considerable opportunity for regional and international corporates. With this in mind, improving access to trade finance is something the banking sector is working hard to deliver across the continent.
However, with a US$1.5tr. trade finance gap, the opportunity to meet the needs of global business is, to a degree, offset by the demands of effective risk assessment around trade fundamentals. One major issue here is the inconsistency of available KYC information. This causes banks to experience difficulties in identifying underlying beneficial owners, a problem largely attributable to data accessibility.
For the banking sector to meet the widening trade finance gap, it needs to increase its credit risk appetite. A crucial remedial step must therefore be the streamlining of technology, helping to unblock process bottlenecks, not least in the KYC area.