The future of trade finance in sub-Saharan Africa amidst hard currency challenges

The future of trade finance in sub-Saharan Africa amidst hard currency challenges

International Trade is conducted in the currencies of major economic powers, largely the US dollar, European Union Euro, Japanese Yen, Chinese Yuan, and UK Pound Sterling. Thus, these currencies clearly have a major impact on how trade is conducted across borders globally, including on the African continent. By the same token, it is important to note that a foreign currency shortage occurs when the demand for the currency exceeds the available supply at the prevailing exchange rate. Download document: https://apo-opa.info/42JJdVr “Soberingly enough, over the last year, most countries in sub-Saharan Africa (SSA) have experienced shortages of US dollars. Every African country has felt the impact – however the problem seems to be more severe in economies such as Kenya, Tanzania, Egypt, Zimbabwe, Nigeria, Ghana, and Zambia that rely on the US currency to pay off their foreign debts and fund critical imports of goods and services” says Gerald Ndosi. What are the key factors contributing to the US dollar shortage? Against this backdrop, the shortage of the US dollar in key economies in SSA has meant liquidity challenges that can impact trade finance and affect the overall pace of economic activities in the region, catalysed by a few key factors.