How investing in trade finance can be profitable and help SMEs thrive
- The trade finance gap has reached $1.7 trillion and small- and medium-sized enterprises (SMEs) are disproportionately affected.
- New technology can enable the transformation of trade finance assets into profitable capital market products.
- A multistakeholder approach is needed to ensure SMEs have greater access to affordable trade finance.
Trade constitutes the backbone of every economy and 80-90% of global trade requires financing. Small and medium-sized enterprises (SMEs) account for around 90% of companies and more than half of the jobs worldwide according to the World Bank. It’s often those SMEs that are underserved and lack access to affordable trade finance.
The Asian Development Bank found that SMEs are disproportionately affected by the $1.7 trillion trade finance gap – the difference between the number of applications to finance companies’ participation in international operations and the number of approvals. SMEs account for 40% of such rejections, much higher than their share of applications.