Are Exporters in Africa Facing Reduced Availability of Trade Finance?

One of the widely-predicted consequences of the global financial crisis is a shortage of trade finance that will exacerbate declines in trade volumes. Many commentators and policymakers have predicted such a shortage, and the G20 London Summit committed to substantial increases in trade finance. Should development practitioners be concerned about whether decreasing availability of trade credit will undermine export performance in sub-Saharan Africa ? Telephone interviews were conducted with a small number of exporting firms in the garment and horticulture sectors in sub-Saharan Africa. These firms did not face problems with trade finance. These firms did, however, face problems with declining demand in export markets and pressures on margins because of exchange-rate movements. There are also indications that trade finance restrictions are hitting other developing regions, particularly Latin America and the Caribbean, and that firms that do not have well-established trading relationships are more vulnerable to shortages of trade finance.