Africa's growing trade finance industry

The trade finance industry in Africa is experiencing a period of growth and transformation, as corporates and financial institutions adapt to the changing landscape on the continent. Standard Bank's Head of Trade for Africa, Amish Shunker, sheds light on the trends shaping trade finance and the challenges that come with it. In a recent interview with CNBC Africa, Shunker highlighted how trade financiers have accommodated the shift towards more agile and sustainable practices at the behest of their clients. One key aspect that clients in Africa are demanding is sustainability in their supply chains, which includes cost management and local product substitution. Banks have had to adjust to these demands by understanding their clients' value chains and providing the necessary financing to support their procurement needs. Additionally, the adoption of technology has played a crucial role in enabling greater efficiency in supply chain management and access to working capital liquidity. Shunker emphasized the importance of banks becoming more nimble and adaptive in meeting these evolving client needs. Amid macroeconomic and geopolitical challenges, discussions around supply chain diversification have become prevalent. As trade wars loom globally, African businesses are looking to diversify their supply chains to mitigate risks and ensure sustainability. Shunker highlighted the need for banks to support clients in navigating these challenges and facilitating trade growth on the continent. Regarding the exit of foreign banks from Africa's trade and infrastructure financing space, Shunker noted a growing appetite for trade and development programs in the region. With significant interest from Europe, China, and India, there is ample opportunity for local and international banks to step in and support these initiatives. Shunker emphasized the importance of collaboration between commercial banks, development financial institutions, and regulators to meet the increasing demand for trade finance in Africa. Capacity building among local banks and regulators is critical to enhancing the flow of trade finance and addressing the existing gaps in trade facilitation on the continent. Shunker stressed the need for partnerships and collective efforts to make trade work more efficiently across borders, while also addressing tariff and non-tariff barriers and promoting infrastructure development through public-private partnerships. By changing historical risk perceptions associated with Africa, banks like Standard Bank aim to enable greater access to trade finance and support the continent's economic growth. The future of trade finance in Africa hinges on the ability of industry players to adapt to evolving client needs, build capacity among local institutions, and foster collaborative relationships to drive sustainable trade growth.