Positioning SMEs in East Africa to access export markets

SMEs account for the majority of registered business entities in East Africa and while access to finance, collateral, and liquidity has always been a challenge for the sector, the pandemic further exaggerated the existing gaps thereby Impacting the sector's ability to trade with foreign markets. Ridhima Shukla of CNBC Africa spoke to Frank Matsaert, CEO of Trademark East Africa to find out about the current status of Intra-region trade in Africa what's being done to improve access.

Fri, 11 Mar 2022 10:40:15 GMT

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AI Generated Summary

Introduction of the Safe Trade Program and digital initiatives to facilitate cross-border trade and enhance market knowledge for SMEs.
Enhancements in access to finance, simplified trading regimes, and specialized trade finance solutions to address collateral issues and support cash flow for micro-traders and SMEs.
Challenges in accessing foreign markets for East Africa's SMEs include market knowledge gaps, financial constraints, complex export processes, and logistical barriers, which are being addressed through strategic interventions.

Small and medium-sized enterprises (SMEs) in East Africa have been facing significant challenges accessing export markets, exacerbated by the COVID-19 pandemic. The pandemic led to border closures, reduced purchasing power, disruptions in value chains, and elevated global shipping rates hindering SMEs in the region. Frank Matsaert, CEO of Trademark East Africa, shed light on the impact of the pandemic on intra-region trade in Africa and the interventions introduced to support SMEs. Matsaert highlighted the Safe Trade Program, which facilitated the movement of goods across borders by implementing health protocols and tracking systems for truck drivers. Additionally, efforts were made to address air freight challenges and establish Safe Trade Zones for cross-border trade. The digital nexus played a vital role in supporting SMEs, with initiatives in e-commerce and market knowledge platforms. Improvements were seen in supporting women traders and micro-enterprises, with approximately 150,000 traders benefiting from enhanced access to finance and simplified trading regimes. Matsaert emphasized the importance of addressing the unique financing needs of micro-traders and SMEs, particularly focusing on collateral and trade finance deficits in the region. Initiatives like factoring and receivable finance were introduced to enhance cash flow for businesses. Challenges hindering East Africa's SMEs from accessing foreign markets include lack of market knowledge, complex export processes, financial constraints, and logistical issues. Trade barriers such as sanitary and phytosanitary standards also present obstacles for agricultural goods traders. Trademark East Africa's initiatives aim to streamline trade processes, enhance market access, and provide financial support to SMEs. The organization works on the ground level to assist businesses in becoming export-ready and leveraging opportunities in promising markets within and beyond East Africa. Promising markets for East African products and services include Southern Africa, West Africa (particularly Nigeria), and North Africa (such as Egypt). The region's competitiveness in horticultural exports and service industries presents significant opportunities for growth. Initiatives like the African Continental Free Trade Area aim to enhance cross-border payment systems and facilitate trade within the continent. By addressing challenges and leveraging regional markets, East Africa's SMEs are poised to expand their reach and thrive in the global marketplace.