VIDEO | EBRD Annual Meeting & Business Forum 2024: Shaping the next era of trade finance

Estimated reading time: 6 minutes

Sustainable finance, changing macroeconomic landscapes, digitalisation, and increasing financial inclusion. 

All are big challenges facing the international trade community today and all are topics on the agenda at the European Bank for Reconstruction and Development’s (EBRD) 33rd Annual Meeting and Business Forum in Yerevan, Armenia.

To learn more about the bank’s work and gain insights into these challenges ahead of the forum, Brian Canup, Assistant Editor, Trade Finance Global (TFG) spoke with Francis Malige, Managing Director, Financial Institutions, EBRD.

EBRD and its Trade Facilitation Program

The EBRD serves a vital role in bolstering economic stability and growth within its regions, and the Trade Facilitation Program (TFP) is an integral part of achieving these goals. 

The TFP facilitates international trade across EBRD economies and the global economy by providing guarantees to international commercial banks that cover political and commercial payment risks associated with transactions performed by issuing banks located in EBRD countries. 

This structure allows for the mitigation of risks that might otherwise deter banks from facilitating trade finance.

Furthermore, the EBRD TFP extends short-term loans and cash to selected banks and factoring companies, which is crucial for supporting trade-related financing for local companies, particularly small and medium-sized enterprises (SMEs). 

The program’s influence is extensive, working with over 100 issuing banks in 26 EBRD countries and over 800 confirming banks worldwide, with annual transaction limits frequently surpassing €3 billion. 

This substantial network highlights the TFP’s role in maintaining trade flows, especially during periods of economic disruption like the war in Ukraine and throughout the COVID-19 pandemic, when the bank acted as a countercyclical investor to keep trade moving.

Malige said, “When it comes to geographic areas today, of course, Ukraine and its reconstruction and support during the war is the number one priority. The TFP has remained active without any interruption since the first day of Russia’s invasion.”

However, the bank is no longer limited to work within Europe.

The EBRD is broadening its geographic footprint and expanding operations into sub-Saharan Africa and Iraq, reflecting a commitment to using financial instruments and partnerships to support economic development further afield. 

Malige said, “We’ve been approved to grow into six countries of sub-Saharan Africa. All of them have applied to become members of EBRD: Nigeria, Kenya, Ghana, Ivory Coast, and Senegal. Benin, as well as Iraq have become full members. We are going to set up operations in those countries with a view to continuing to use banks and trade to support these priorities. ”

The expansion aims to bring EBRD’s expertise and resources to a broader array of developing economies, enhancing their access to international markets and promoting sustainable economic practices.

Banking as a catalyst for greener change

One of the main aims of the EBRD is to promote the greening of the broader economy, starting with the banking sector.

Malige said, “I see the banking sector as the equivalent of the blood circulation system in the human body. That’s what banks do in an economy. They carry the oxygen – the funding – into the muscles that are the companies, the entrepreneurs. If you can green the DNA of your blood, then you can green the entire body, and that’s exactly what banks are going to be used for.”

In addressing the environmental impacts traditionally associated with trade, such as emissions from transportation, the EBRD is focused on introducing and facilitating access to green technologies in its countries of operation. This includes the import of equipment for renewable energy sources like wind power and sustainable resource management technologies such as water treatment systems.

On the digital front, the bank recognises the critical role of digitalisation in modern economies and considers it one of its strategic priorities, alongside greening the economy and enhancing inclusiveness. 

Digitalisation underpins these dimensions by streamlining processes and reducing inefficiencies, which in turn supports environmental and inclusive initiatives. The EBRD is committed to reducing the digital divide between its regions of operation and more advanced economies, thereby ensuring that these regions are not left behind in the digital transformation. 

Malige said, “This is especially important because we work in economies that are typically not the first recipients of investments when it comes to digital investments.”

Initiatives include supporting the digitalisation of trade processes and encouraging partner banks in the EBRD’s countries to adopt digital solutions for operations such as KYC and client onboarding. 

Through these efforts, the EBRD leads the way in fostering economic development by integrating digital technologies that support green and inclusive growth within its member countries.

It all starts with the right people

The EBRD’s success and that of the TFP hinges significantly on effective collaboration and the strategic engagement of diverse stakeholders, which makes establishing and nurturing key partnerships across various international bodies and institutions vital. 

This includes prominent organisations such as the International Chambers of Commerce (ICC), the World Trade Organization (WTO), and other international financial institutions like the International Finance Corporation (IFC) and the Asian Development Bank (ADB), which share technological frameworks and cooperative strategies with the EBRD.

Such collaborations, while adding layers of complexity, are crucial for aligning strategic initiatives and implementing them effectively. 

Malige said, “Only through dialogue, cooperation, and knowledge sharing can we attain the synergies that will help to amplify our efforts.”

Leaders in the space are encouraged to embrace trade as a complement to local industrial strengths and to invest in it as a critical driver of economic development with an emphasis on training, community building, and fostering personal connections within the trade sector.

Malige said, “Trade is not just about sending messages via Swift to one another. Our experience is that trade works much better when people who know one another physically, who have met.”

Such investments in knowledge and relationships can make trade not only more effective but also more rewarding, positioning trade finance as a vibrant and impactful field for aspiring professionals.

What advice would Malige give to professionals just entering the trade finance industry? 

“For aspiring readers or aspiring trade practitioners, it’s a fantastic field, and you will absolutely enjoy it. Invest your time in it and become industry specialists, because you will enjoy every minute of it.”

For those interested in the future of trade finance and economic sustainability, consider attending the EBRD’s 33rd Annual Meeting and Business Forum in Yerevan, Armenia from 14 – 16 May.