Speaking at a roundtable with heads of multilateral development banks (MDBs) on the sidelines of World Bank Group and International Monetary Fund annual meetings in Washington D.C. on 25 October, Director-General Ngozi Okonjo-Iweala highlighted the critical role of supply chain finance in integrating small businesses from developing countries into global trade.
She commended the WTO’s and International Finance Corporation’s (IFC) progress in promoting supply chain finance and supported the next steps agreed by MDBs to improve access to finance.
IFC Managing Director Makhtar Diop co-hosted the event.
The Director-General noted the substantial work carried out by the WTO-IFC team over the past few years to improve access to supply chain finance, including advancing principles for green trade finance, digitizing trade finance, promoting services provided by correspondent banks, and providing technical assistance.
Supply chain finance refers to financial arrangements unlocking working capital and easing financial burden on suppliers in global value chains. This includes the discounting of suppliers’ invoices by a bank or financier, allowing businesses to borrow against the value of their outstanding invoices.
DG Okonjo-Iweala emphasized that multilateral development banks have increased trade and supply finance support from US$ 30 billion annually before the COVID-19 pandemic to nearly US$ 50 billion last year, helping ensure the supply of essential food, medicine and other critical imports.
She also pointed out that global supply chain finance, one of the fastest-growing segments of trade finance, is now valued at around US$ 2.3 trillion. Despite the growth of trade finance, she noted, small businesses in developing countries have not fully benefited from this expansion due to challenges such as weak legal frameworks, inadequate technological infrastructure, and high costs.
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