Standard Bank: Dollar shortage bites Africa trade
Standard Bank’s Trade Barometer, an index designed to provide reliable data relevant to understanding trends and also growing African cross-border trade has been released. Joining CNBC Africa to unpack the findings is Philip Myburgh, Head of Trade, Business and Commercial Banking, Standard Bank.
Tue, 19 Sep 2023 15:54:22 GMT
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AI Generated Summary
- The Trade Barometer reveals the struggles faced by SMEs in trading within Africa and globally, citing infrastructure and power as significant obstacles.
- Nigeria shows improvement in rankings due to positive perceptions toward government policies, while countries like Zambia and Mozambique continue to face challenges.
- Global macroeconomic factors, including rising interest rates and foreign currency shortages, pose additional challenges for African businesses.
Standard Bank recently released its Trade Barometer, an index designed to provide reliable data relevant to understanding trends and promoting African cross-border trade. The findings from this edition shed light on the challenges and opportunities faced by small and medium-sized enterprises (SMEs) across 10 African markets. Philip Myburgh, Head of Trade, Business, and Commercial Banking at Standard Bank, discussed the key insights from the report in an exclusive interview with CNBC Africa.
The report highlights the struggles that SMEs encounter in trading within Africa and globally. Infrastructure, specifically power, emerged as a significant obstacle hindering trade for these businesses. Despite the hurdles, SMEs expressed optimism about business confidence, showcasing the resilience of African enterprises.
Nigeria showed improvement in the rankings, driven by positive perceptions among small businesses toward the new government and its policies. On the other hand, countries like Zambia and Mozambique continue to face challenges. South Africa, while acknowledging power issues, grapples with a host of other obstacles affecting business operations.
The global macroeconomic landscape, marked by rising interest rates and foreign currency shortages, poses additional challenges for African businesses. The scarcity of dollars to pay for imports hampers trade activities, emphasizing the need for viable solutions like the Pan-Africa Payment and Settlement System to facilitate cross-border transactions.
Government support plays a crucial role in shaping business sentiment and impacting trade outcomes. Policies focused on enhancing certainty, such as exchange rate unification in Nigeria, received positive feedback. Conversely, stringent regulations like increased reserve rate requirements in Mozambique have adverse effects on access to capital for SMEs.
Infrastructure development remains a pressing issue on the continent, with ongoing projects showing some promise but falling short of meeting the rapid pace of economic and population growth. While power challenges persist, recent regulations promoting independent power producers have instilled a level of confidence among businesses.
Despite the hurdles, the Trade Barometer reflects a sense of optimism among African businesses, with most anticipating revenue growth in the coming years. The combination of challenges and opportunities paints a complex picture of the African trade landscape, signaling both resilience and potential for growth.
In conclusion, the Trade Barometer's third edition underscores the dynamic nature of African cross-border trade, highlighting the need for collaborative efforts between businesses, governments, and financial institutions to address existing challenges and foster a conducive environment for trade and economic development.