Boosting Global Trade Amidst Current Economic Slowdown
Trade is crucial to bridging economic gaps and boosting infrastructural development. Countries with strong international trade portfolios tend to grow faster, innovate more, and provide higher incomes and economic opportunities for their citizens.
Beyond integrating into the global economy through trade and global value chains that help drive economic growth, open trade also benefits low-income households by allowing consumers to access affordable goods and services.
However, the impact of Russia's war in Ukraine has been felt by people far beyond its borders due in part to its effects on trade-in – and the prices of – foodstuffs and energy commodities. One year since the war began, the World Trade Organization (WTO) published a report assessing the conflict’s impact on trade and development. Cereal exportation to Africa, which is germane to food security in the region, declined by almost 15% in 2022, with prices of the commodities like wheat increasing by nearly 17%.
This trade disruption led the World Trade Organization (WTO) to readjust its 2023 trade growth projection downwards from 3.4% to 1%, given the reduced global trade demand, general inflation, and geopolitical tensions. The United Nations Conference on Trade and Development (UNCTAD) agreed, lowering their projections for 2023 in their latest Global Trade Update, published in December. Furthermore, Export Development Canada (EDC) published their annual year-end Trade Confidence Index, reporting that trade confidence has declined sharply for Canadian businesses over the past year and continues to decrease among concerns over rising interest rates and a looming global recession.
In Nigeria, a similar slow-down trend in Trade is expected for 2023, considering that the global geopolitical tension and inflation hike will trickle down to the micro-economy as well as the FX illiquidity issues we have been experiencing locally for about 2 years due to revenue drop will further slowdown trade for 2023.
However, amid the challenges militating the flow of international trade in Europe, the Americas, Asia, and Africa could be viable trading partners for the rest of the world in supplying cereals, fertilizer, energy, and manufactured goods, thereby having a thriving trade business for 2023 and beyond.
The Global Trade Review is an annual event where global experts in the trade and commerce industries come together to discuss global trade as it affects the economies of each continent and country and seek solutions to manoeuvre challenges that may be presented. This year’s event themed “A new dawn: plotting a course for West African trade” plans to bring together stakeholders and global experts to discuss how Africa as a whole and West Africa as a region can maximize the Trade opportunities that this global challenging time has thrown up.
On the African continental stage, Stanbic IBTC Bank’s unique intra-African trade products enabled settlements of international transactions while preventing payment risks associated with the international trade business. This was in addition to providing regional solutions such as issuing payment guarantees to exporters without needing a letter of credit and its related costs to the importer.
As global trade weathers the current challenges, the need for providing cross-border payments remains imperative. Africa is a significant trade partner with Europe, China, and other Asian countries, thus, the significance of Stanbic IBTC’s Africa China Agent Proposition (ACAP), a product tailored at providing world-class financial solutions to African importers who transact with China exporters. The payment system allows exclusive access to approved trade agents responsible for linking African businesses to numerous suppliers and manufacturers across China. The appointed agent provides access to over 10,000 Chinese suppliers and assesses suppliers to ensure their products meet global standards.
ACAP offers a broad ecosystem of services, solutions, and support, which equips African businesses to leverage trade and growth opportunities and ultimately drive Africa’s economic growth. The ecosystem services afford importers from Africa sufficient lead time to place orders for their goods before payment is made. It also helps ease the cash flow of African importers by providing access to financing while empowering them to have end-to-end visibility of the entire importation and logistic process.
Inter-dependencies with other countries at different levels of trade are necessary as no country is self-sufficient in the global economy. Integration into the global economy has proven to be a powerful tool for governments to promote economic growth and development and reduce poverty. Stanbic IBTC also engaged in strategic partnerships with other multilateral and regional organisations such as the African Development Bank, African Import-Export Bank, ECOWAS Bank for Investment and Development, and Arab Bank for Economic Development in Africa (BADEA) in the facilitation and implementation of the African Continental Free Trade Area (AFCFTA) agreement to the benefits of its clients. Furthermore, it has continued to provide financial guarantees and solutions to small and medium-scale enterprises in the continent, which account for more than 80 per cent of the continent’s economic space.
Similarly, through Stanbic IBTC's Trade Club solution, there is access to unlimited opportunities for business owners to meet and trade with suppliers anywhere in the world. The Stanbic IBTC Trade Club solution provides financing solutions for domestic or cross-border trade activities. It also provides good exposure for business owners to trade with manufacturers and suppliers worldwide, giving them the necessary exposure for their businesses to thrive. The solution identifies with businesses, empowering them with the required trade tools and expertise while linking them with new global trade partnerships they can trust while nurturing their growth through good human relationships.
Using its trade resources, the Stanbic IBTC Trade Club provides relevant tips and the right tools to build your business. It also provides valuable information regarding business models, accounting, marketing, and legal aspects that enable enterprises to achieve set goals.
With Stanbic IBTC’s unique financial offerings, Africa remains on the part of an economic resurgence that will eventually enable the continent to compete with other world economies.