BIG


Smallholder farmers, entrepreneurs, traders and many others can make a living growing, making or buying something relatively cheaply in a developing country and exporting it to a place where the product commands a better price. Such is the nature of international trade. Generally though, it’s necessary to work at scale to make things worthwhile – generating just 50 cents profit per kilo on something, for example, means exporting very many kilos of that something. Those who cannot afford to work at scale must borrow the money to do so; to help dig, grow, store, transport or market their goods.


28


DEAL


Why trade finance matters to developing countries


Known as trade finance, the borrowed money is vital to the global economy.


During the 2008 financial crisis, The Economist reported that trade was shrinking at the fastest rate since the second world war: “The global economy’s woes are largely to blame, but scarce trade finance, especially in emerging markets, hardly helps,” the magazine stated, explaining that the World Trade Organization (WTO) put the trade finance shortfall at between US$100 billion and US$300 billion by March 2009.


PHOTO: Avigator Fortuner/shutterstock.com


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