Achieving Growth in Africa: The Challenges and How Trade and Trade Finance Can Help

LAGOS (Capital Markets in Africa) – It has been a difficult time economically for much of Africa over the last few years resulting in, with some exceptions, economic growth that has not lived up to hope or expectation. The reasons for this are many and diverse, differing from country to country and this article will be looking at some of the main challenges facing the continent and attempting to show how trade and trade finance can be a part of the solution.

Over the last few years political developments have hindered progress in a number of countries, notably in Zimbabwe where the actions of the previous government discouraged outside investment and caused severe economic problems. In Kenya the disputed (and re-run) election in 2017 caused much disruption to the Kenyan economy. There were other significant issues in South Africa, at the top of government causing economic problems which ultimately resulted in a change in the ANC leadership and subsequently the South African presidency. At the same time, Mozambique was dealing with the fallout from the hidden loans scandal. Political developments such as these almost always cause a drop off in inward investment levels and reduce growth.

From an economic perspective, there have been issues too. Tax shortfalls have been common across Africa over the last few years, the result in part of lower growth and therefore lower corporate profits. This meant there was less money available for governments to spend on projects which could promoted growth through trade. One major issue for African farmers and producers/exporters is the lack of transport infrastructure. It is incredibly difficult to move goods from region to region and more so to export from the continent, resulting in a much more limited marketplace for both the farmers and SME producers as well as the larger corporates to sell their goods and services.

An extract from the INTO AFRICA August Edition: Driving Africa Opportunities. To read full article, please download by clicking: INTO AFRICA PUBLICATION: AUGUST 2018 EDITION.

Contributor’s Profile
Simon Cook is a partner in the Trade & Export Finance Group in law firm Sullivan & Worcester’s London office. He has experience in a wide variety of banking and finance transactions, including structured trade finance, trade finance, commodity finance, project finance, invoice discounting facilities, warehouse finance, supply chain finance, ECA finance and borrowing-base facilities. He advises on transactions across Africa, the Middle East, Asia and the CIS. His work covers a range of financings acting for both lenders (including multilateral agencies, development finance institutions and investment funds, as well as commercial lenders) and borrowers notably in the oil, telecoms, soft commodities and metals sectors in Africa and the Middle East, where he was based for four years. Simon also acts for industry bodies such as the International Trade and Forfaiting Association (ITFA) and is a member of ITFA’s Africa Regional Committee.

Simon has recently authored a chapter on Trade Finance in Globe Law and Business’ new book entitled Oil and Gas Trading and chapters for Sweet & Maxwell’s book entitled A Practitioner’s Guide to Trade and Commodity Finance. In Chambers UK, 2018 Simon is a Ranked Lawyer for Commodities: Trade Finance and in the UK Legal 500, 2017 he is recognised as a Leading Individual.