The Director General of the World Trade Organization (WTO) , Ngozi Okonjo-Iweala , highlighted the progress made by this organization and the International Finance Corporation (IFC) in promoting supply chain financing , which, she noted, allows small businesses in developing countries to be integrated into global trade.
Okonjo-Iweala noted that multilateral development banks have increased financial support for trade and supply from $30 billion annually before the COVID-19 pandemic to nearly $50 billion last year, helping to secure supplies of essential food, medicines and other imports.
Speaking at a roundtable with heads of multilateral development banks, which took place on the sidelines of the annual meetings of the World Bank Group and the International Monetary Fund (IMF) in Washington, USA, he also noted that global supply chain financing is currently valued at around $2.3 trillion .
However, despite the increase in trade finance, she said, small businesses in developing countries have not benefited from this expansion , due to challenges such as weak legal frameworks, inadequate technological infrastructure and high costs.
The WTO Director-General highlighted the growth potential of these companies through greater access to supply chain financing.
“WTO research shows that a 10% increase in the use of international factoring – the main type of supply chain finance used by small businesses to obtain immediate cash against unpaid invoices – can boost countries’ trade by 1%,” he explained.
At the event, he stressed the commitment of multilateral development banks to coordinate activities , with a view to increasing financial support through their programs and adopting concrete measures to assist in the legal, regulatory and operational framework for market development.
These efforts, he said, will help make trade more inclusive and competitive, ultimately leading to “greater benefits from trade and better development and poverty reduction outcomes.”
In addition, it supported the new measures agreed by multilateral development banks to improve access to financing , specifically in promoting green trade, digitalization in this type of trade processes, as well as promoting services provided by correspondent banks and technical assistance.
Meanwhile, Makhtar Diop , Managing Director of the IFC, highlighted the achievements made by both institutions in this area, and indicated that “supply chain financing is crucial to empower companies in emerging markets, especially SMEs, to participate effectively in local and global value chains.”
Participants at the event, including senior officials from major multilateral development institutions such as the European Bank for Reconstruction and Development (EBRD) , the African Export-Import Bank (Afreximbank) , and others, pledged to strengthen cooperation by creating a joint group to leverage resources to support small businesses in supply chains.
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