The withdrawal of major international banks from developing markets in Africa and Asia has resulted in a lack of trade finance in some of the world’s poorest countries, according to the World Trade Organisation’s (WTO’s) director general, Roberto Azevêdo.

The lack of capacity in the financial sector in less developed countries is in turn hampering global development according to Azevêdo.

Uneven recovery
The WTO’s sixth director general argues in a column written for the Inter Press Agency that after the financial crisis, the supply of trade finance has largely returned to normal levels in major markets, but not everywhere and not for everyone.

The structural difficulties of poor countries in accessing trade finance have not disappeared – indeed the situation may well have declined due to the effects of the crisis.

Increased regulation
There are indications that markets are even more selective now, Azevêdo says.

He maintains that under increased regulatory scrutiny, many institutions have lowered their risk-appetites and are focusing more on their established customers. Some are deliberately decreasing their number of clients in a so-called “flight to quality”.

Financing gaps
In this environment, the director general sees the lower end of the market struggling to obtain affordable finance, with small firms in the smaller, less-developed countries affected the most.

“I was particularly struck by the fact that the financing gaps are the highest in the poorest countries, notably in Africa and Asia. And I was struck by the size of those gaps,” Azevêdo said.

A full version of Roberto Azevêdo’s column can be found here.