A pan-Africa financial institution, Absa, has reiterated its commitment to driving trade financing across Africa by providing digital solutions that would remove impediments to accessing finance, especially by SMEs.
The organisation identified trade financing as a critical factor as it can deliver a higher impact for Africa.
The Institution, which delivered its digitisation projection in a recent article, advocated an increased value proposition around trade financing and likened it to the oil that greases supply chains and ensures that buyers and sellers fulfill their obligations.
It further noted that digitisation is a key enabler in democratising trade finance, and that the COVID-19 pandemic has accelerated the need for wider adoption of digital trade finance solutions by SMEs.
Head, Trade Finance and Financial Institutions Trade Sales, Oladapo Adeigbe, listed some of the impediments to accessing financial products by SMEs.
While noting that technology-driven solutions are becoming more relevant, Adeigbe said “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.
“The hurdles that impede growth in the informal market have not been effectively tackled. For example, an average transaction that involves customs clearance in the local ports requires tons of paper documents which slows down trade activities by forcing unnecessary supply chain bottlenecks,” he said.