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ICC has contributed to a new report from a consortium of multilateral development banks and commercial research institutions, assessing the views of sub-Saharan banks on the current response of multilateral development banks (MDBs) to maintain a functioning commercial finance market correctly.
Entitled Pulse check, the report brings together perspectives and insights from nearly 70 business finance executives from 20 countries. Taxpayers unanimously call for an urgent focus on support programs targeting the private sector and smaller companies to avoid a “second wave insolvency crisis” that threatens more widespread economic difficulties on the continent.
The report shows that the demand for trade finance instruments in the first half of 2020 has clearly stabilized compared to growth expectations due to suspended projects and investments, but the demand has not collapsed. Furthermore, the largest banks interviewed, although with sufficient liquidity during the period, indicate that they have restricted the supply of financing to existing clients, away from new clients / projects.
Overall, the financial market has contracted by at least 10% from 2019 levels in volume and even more in value, but has shown early positive signs since June, mainly concentrated in traditional sectors such as commodities. Still, full recovery will only be seen by the end of 2021 at the earliest. The main limitations for the banks interviewed during the crisis have focused on macroprudential / risk limitations to extend credit outside the comfort zone, especially since liquidity has been sufficient.
The report makes several priority recommendations for MDBs, including sectoral focus on the private sector, increasing the availability of risk-sharing instruments, and a more granular financing offering. It also illustrates a growing emphasis on pooling efforts and resources between MDBs and development finance institutions operating in Africa to better respond to the current situation.
In addition to the ICC, organizations that contributed to the report include the African Development Bank (AfDB), the Arab Bank for Economic Development in Africa (BADEA), the Banque Ouest-Africaine de Développement (BOAD), the African Development Bank Oriental (EADB). , the International Trade Center (ITC), the International Islamic Trade Finance Corporation (ITFC) and the Trade and Development Bank (TDB).
Read the report
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