1. The trade finance gap has reached $1.7 trillion, excessively affecting small & medium-sized enterprises (SMEs).
2. New technologies can have a vital role in transforming trade finance assets into profitable market products.
3. A multitasker approach is essential to ensure the easy accessibility of trade finance instruments for SMEs.
Trade acts as an accelerator that gives a boost to a country’s economy, 80-90% of international trade requires financing out of which, around 90% of the organizations are owned by SMEs and over half of the jobs globally according to the World Bank. Generally, these are the SMEs that are underserved and lack reasonable trade finance. One thing is clear: unless SMEs are capable of executing trade transactions with the support of financing, the economy cannot improve.
According to the latest report issued by Asian Development Bank (ADB), SMEs are adversely affected by the $1.7 trillion trade finance gap ie. the difference between the number of trade finance applications by SMEs involved in global transactions and the number of approvals. As per the data, SMEs face 40% of these rejections which is quite higher than their share of applications. In this regard, ADB partnered with Seabank to expand trade finance in Vietnam.
Read more: https://www.emeriobanque.com/news/investing-in-trade-finance-can-help-smes-uplift
