African trade finance sees $5bn in portfolio outflows in Q1 2020
Constrained global financial conditions caused by Covid-19 have led to massive portfolio outflows from Africa, exceeding $5 billion in the first quarter of 2020, a new continent-wide survey on trade finance has shown. About $3.1 billion left the South African market alone, the report found.
The African Trade Finance Survey Report examines how trade finance has evolved during the pandemic and highlights the role it can play in overcoming the social and economic fallout of the disease. The survey was conducted by African Export-Import Bank, jointly with the UN Economic Commission for Africa and the African Development Bank-hosted Making Finance Work for Africa Partnership. The survey covers the first four months of 2020, including April, when global trade recorded its largest contraction on record.
Despite the many challenges that came along with Covid-19, some opportunities also arose, the report noted. A number of African countries’ economies showed strong resilience and expansion during the pandemic primarily due to their ability to be agile and to digitalize swiftly over the period.
To mitigate the significant outflows and mobilize for recovery, Vera Songwe, Executive Secretary at the UN Economic Commission for Africa, urged African leaders, especially Central Bank Governors and Finance Ministers and development partners, to further support institutions such as Afreximbank through capital increases and deploy more resources towards Africa’s recovery.
