The
Africa Trade Finance Survey Report garnered responses from 185 commercial banks – representing 58% of total assets across the continent – to better understand the impact of Covid-19 on African lenders of trade finance for the period January to April 2020.
It reveals that, as previously suspected, the pandemic “affected the trade finance activities of banks across the continent and led to material disruptions to trade”.
While a “significant range of respondents” from different subregions and types of bank reported increased demand for trade finance – with 37% experiencing rising demand from export clients, for instance – the study highlights how local and foreign banks also quickly became risk averse in the initial phase of Covid-19.
UK-based SME financing provider Bibby Financial Services (BFS) says it has established a £300mn pandemic recovery fund for new and existing customers as coronavirus lockdown restrictions in the UK begin to ease.
The company says the fund will target businesses trading on credit terms who are seeking funding to grow as the economy reopens. SMEs will be able to access the funds through BFS invoice finance products such as trade and export finance variants, factoring, invoice discounting and construction finance.
It says it expects most of the fund to be directed toward SMEs in the manufacturing, services, construction, transport and recruitment sectors.
An influential industry group has issued first-of-its-kind guidance on structured letters of credit (LCs), a divisive product that is gaining popularity in the trade finance sector. Structured LCs, also known as synthetic or prepaid LCs, vary widely but typically involve the issuing bank receiving upfront some or all of the funds due. The banks involved .
The Eastern and Southern African Trade and Development Bank (TDB) has issued a three-year partial risk guarantee facility to support women-led small and medium enterprises (SMEs) in Burundi.
Provided as part of its Trade and Development Fund (TDF), the guarantee, valued at BuFr500mn (US$260,000) will be used by microfinance institution Women’s Initiative for Self-Empowerment (WISE) to borrow approximately US$510,000 in working capital from Banque de Gestion et de Financement (BGF).
The funding unlocked will be on-lent by WISE to women-led businesses operating in the agribusiness and trade sectors. In addition, the TDF guarantee will be blended with a non-repayable technical assistance grant of US$30,000 targeted at strengthening WISE’s corporate governance and supporting staff training on modern SME lending processes.
New Zealand’s government is proposing mandatory climate-related risk disclosures, introducing a bill last week that would compel banks and insurers to divulge climate risks to investors.
The proposed legislation will require large lenders and insurance companies to begin collecting data from April next year in order to meet mooted disclosure requirements for the 2023 financial year.
The move means New Zealand will be the first country to mandate reporting of climate risks by the financial sector, according to the environment minister, James Shaw.
“Australia, Canada, UK, France, Japan, and the European Union are all working towards some form of climate risk reporting for companies, but New Zealand is moving ahead of them by making disclosures about climate risk mandatory across the financial system,” Shaw said in a statement last week.