ICC Releases its Latest Trade Finance Survey

 

Only 52% of respondents reported an increase in trade finance activity, compared to 63% in 2015 and 80% in 2012. Furthermore, the perceived shortfall came predominantly from regional and global banks - 78% and 56% respectively, compared to 41% of national banks.

 

ICC Secretary General John Danilovich said: " We must emphasise the importance of trade finance. It is often forgotten - trade finance has dropped off the international agenda. We need to do more to communicate its central importance to the global economy ."

 

A decrease in the use of traditional trade finance was also evident in this year's Global Survey report, with nearly 50% of respondents reporting a decrease in commercial Letters of Credit, while nearly 35% reported an increase in supply chain finance deals.

 

This year's Global Survey also highlights the benefits that digitization brings to the industry - particularly by automating processes and reducing the cost and complexity of trade finance. 

 

Despite this, only 7.4% of banks reported that their trade finance processes had been digitized "to a great extent" , while 43% reported "very little" advancement, with global banks the most likely to embrace digital solutions. However, the Global Survey predicts an acceleration towards digitization in the years to come for the trade finance industry.

 

The increasing engagement of African economies and businesses in international trade is also a key focus of this year's Global Survey. 

 

While intra-African trade has shown signs of significant growth - accounting for nearly 18% of the region's total trade in 2014, an upward trend from 10% in 2010 - intra-African investment accounts for only 12% of the total value of investment in Africa, in comparison to 33% in Asia. In addition, 66% of businesses find access to finance a significant obstacle to trade in Africa.