International Chamber of Commerce (ICC)'s Advisory Group on Trade Finance has 
called on G20 leaders to leverage trade finance to safeguard SMEs and power 
global recovery.

The co-chairs of a high-level advisory group to the International Chamber of 
Commerce (ICC) have issued an urgent call to G20 leaders to take action to 
avert the risk of widespread insolvencies amongst small- and medium-sized 
enterprises (SMEs) globally, due to the COVID-19 pandemic.

In an open letter, Victor K. Fung (Chairman, Fung Group) and Marcus Wallenberg 
(Chair, SEB) have urged G20 leaders to make coordinated interventions to 
increase the availability of trade-related finance – given that this is a 
proven low-risk means of providing fresh stimulus to increasingly stretched 
SMEs.

Trade finance underpins somewhere between 80 – 90% of global trade and acts as 
a vital source of working capital for many SMEs. Recent signals suggest that 
supply of trade credit to SMEs and emerging markets is at significant risk in 
response to growing corporate, sovereign and currency risks.

In their capacities as the co-chairs of the ICC Advisory Group on Trade 
Finance, Mr Fung and Mr Wallenberg appeal to world leaders to act before it is 
too late.

Mr Fung said: "There is a clear business case to keep the supply of trade 
finance flowing across supply chains globally and especially for small- and 
medium-sized enterprises and the millions of jobs that they support. The real 
economy — whether we speak of manufacturing and production, or retail and 
services — relies on this form of working capital, and it needs your support 
now."

Marcus Wallenberg added: "Based on our experience leading multinational firms 
through previous economic shocks, we strongly believe that coordinated action 
to increase the availability and accessibility of trade-related finance could 
help avert a widespread SME solvency crisis in the coming months — while laying 
the foundations for a faster recovery from the COVID-19 pandemic."

The call from the two prominent business leaders in advance of the G20 Leaders' 
Summit later this month emphasises that trade-related finance is an ideal 
vehicle through which to deploy fresh stimulus to the real economy — offering 
an opportunity for governments to target available support to the immediate 
liquidity needs of SMEs. The low-risk profile of trade financing should also 
assuage growing government concerns about possibly adding more public debt.

ICC has further outlined additional measures that could be implemented by G20 
governments to prime the supply of trade financing globally — including a 
scaling of publicly backed credit guarantee schemes, regulatory interventions 
and export credit insurance to incentivize the provision of trade credit by 
commercial banks.

ICC Secretary General John W.H. Denton AO said:

"Continued uncertainty in the global economy could create a perfect storm for 
widespread retrenchment in the trade credit market in the coming months. With 
many small businesses operating on dwindling reserves in the wake of the 
pandemic, this presents an acute risk of accelerating already worrying rates of 
business failures.

"Major interventions to prime the supply of trade finance should be viewed by 
G20 governments as not only means of mitigating downside risks to the economy, 
but as low- or no-cost means to fuel a rapid and resilient recovery from the 
crisis. It's vital that the leaders of the world's leading economies seize the 
narrow window of opportunity to save our SMEs."

The ICC Advisory on Trade Finance provides strategic insights to shape global 
discussions on the trade financing ecosystem in the context of COVID-19.

In addition to the two co-chairs, members of the group include: Anabel 
Gonzalez, Former Minister of Trade of Costa Rica and Senior Fellow at the 
Peterson Institute for International Economics; Amy Jadesimi, Chief Executive 
Officer of Lagos Deep Offshore Logistics Base (LADOL); Flora Mutahi, Chief 
Executive Officer of Melvin Marsh; Takeshi Niinami, President and Chief 
Executive Officer of Suntory Holdings; Samuel Palmisano, Chairman of the Center 
for Global Enterprise; and Mark Tucker, Group Chairman of HSBC Holdings; Jeremy 
Weir, CEO, Trafigura; and Zhu Min, Chairman of the National Institute of 
Financial Research at Tsinghua University.

Read the open letter( 
https://iccwbo.org/publication/leveraging-trade-finance-to-safeguard-smes-and-power-the-global-recovery/)


SOURCE: International Chamber of Commerce