Insider thoughts: Steven Beck of ADB on the state of trade finance

Capacity building: the defining pillar for ICCA and ADBs strategic partnership for the third year

Singapore, 3 March: The Asian Development Bank (ADB) has renewed its strategic partnership with the International Chamber of Commerce (ICC) Academy for a third consecutive year. The agreement allows ADB to continue offering the ICC Academy’s online accreditation programmes to its partner banks. This year, they aim to train 178 staff members from 80 partner banks in 21 countries.

The collaboration reflects the strong and ongoing commitment of both organisations towards progressing capabilities in developing countries. Steven Beck, Head of Trade Finance at ADB believes that together, ICC Academy and ADB can strengthen and further international trade, by providing banks with core industry knowledge and underpinning support for small- and medium-sized enterprises (SMEs), including those owned and led by women.

On this occasion, we took the opportunity to speak with Steven Beck about a range of issues—from the current trade landscape to its impact on SME trade financing.

What is the current trade landscape and what do you think 2020 will look like?

Steven Beck: The operating environment for trade finance has been characterised by uncertainty. Trade tensions and slower growth in some of Asia’s larger markets have had an impact. Moreover, the unfolding of the COVID-19 situation is already having an adverse effect on overall economic activity—this includes trade and regional as well as global supply chains, at least in the short term. Once the virus is contained, there is likely to be substantial growth from pent up demand.

For the year 2020, the estimated global trade finance gap is large at US$1.5 trillion. Achieving the Sustainable Development Goals (SDGs) is at risk if this persistently large market gap continues to hamper international trade. Hence, it’s incumbent on us to work together to close these gaps by adopting certain measures. Sharing risks in transactions, tackling challenges related to trade finance gaps – like unintended consequences from regulation – and moving forward on the digital agenda are some of the ways to tackle the market gap. Also, trade-based money laundering will become an area of increasing focus.

Making choices about what information technology initiatives to undertake and purchase will become even more difficult.  As technology becomes obsolete quickly, it requires tremendous resources and operational upheaval to implement. Creating global digital standards and protocols to drive inter-operability, interconnectedness of systems and platforms on which trade will move in the future is important to ensure international trade continuity to deliver peace and prosperity.  ADB is pleased to be partnering with ICC and the Singapore Government to implement the Digital Standards Initiative, which is set to be launched this week.

Will the current climate have a bearing on SMEs for whom raising finance for trade is already difficult? If so, how can this be addressed?

Steven Beck: The ADB’s 2019 Trade Finance Gaps, Growth and Jobs Survey identified a US$1.5 trillion trade finance gap, with SMEs being the most underserved segment of the market. More than 40% of SME applications for financial support are rejected, with the percentage of rejections even higher among women-led businesses. This element of the gap, holding back the greatest engine for job creation and growth, needs to be addressed.

There is growing optimism that fintech and digitisation are potential solutions to bridge the trade finance gap, particularly among SMEs. According to our survey, 86% of banks say they are preparing to service more SMEs using technology by more efficiently processing know-your-customer and deepening their ability to data-map this market segment. A basic legal and institutional framework must be put in place. Until firms and banks have legal grounds to transact digitally, technology will not materially reduce gaps. We’re working with a variety of public and private sector partners to advance these issues to help close gaps in this critical area.

How does ADB’s Trade Finance Programme (TFP) help its developing member countries deliver the Sustainable Development Goals (SDGs)? 

Steven Beck: The importance of short-term finance to support global trade and trade finance is explicitly recognised in the Addis Ababa Action Agenda on Financing for Development, as a means of implementing the SDGs. TFP empowers countries to meet these goals by closing market gaps through guarantees, loans and knowledge products. The TFP-SDG wheel summarizes the initiatives of the TFP to help achieve the SDGs.

In 2019, TFP supported 4,832 transactions valued at US$5.4 billion through guarantees and loans, with US$3.5 billion co-financed by banks, private insurers and official agencies. Of the 21 countries where TFP is present, the most active ones are Armenia, Bangladesh, Pakistan, Sri Lanka and Vietnam.

With knowledge as an integral part of TFP’s business, its transactional work and extensive network means it is well placed to discern what knowledge products, services and solutions are needed to close these market gaps. TFP has played a global leadership role in education, which has fed back into business, delivering substantial growth and development impact.

ADB will once again be offering the ICC Academy’s online accreditation programmes to train staff members from partner banks for the 3rd consecutive year. Tell us about this collaboration.

Steven Beck: ADB’s partnership with the ICC Academy has delivered online accreditation programmes to more than 500 employees at 80 banks in 21 Asian and Pacific countries. In this training phase, we are incorporating the ICC Academy’s trade finance certificates (Global Trade Certificate and Certified Trade Finance Professional) and international business programmes (Incoterms® 2020 Certificate, the world’s only ICC-endorsed online trade term certificate, Export/Import Certificate and Trade Agreement Certificate). The curriculum will contribute to ADB’s established Trade Finance Programme (TFP) by using the ICC Academy’s international training model and innovative digital platform. With the support of the ICC Academy, the TFP is committed to providing partner banks with the knowledge required to give companies the best possible support to reach their potential through international trade.

Through this strategic partnership, both the ICC Academy and ADB, aim to achieve their capacity building initiative, as part of the SDGs.

Testimonial from TFP candidates

“The Global Trade Certificate (GTC) is very practical and helpful. The lessons are easy to understand and has supported my objectives. I can now manage to have answers for issues that I have been wondering for a while, and the foundation to achieve more knowledge.”
Mai Khanu Nhu, Financial Institutions Officer, Orient Commercial Bank, Vietnam

“The programme is user-friendly, the enhanced video instructions make it easy to grasp information and understand the course. Superb experience.”
Sherzod Mamasaliev, Head of International Currency Operations Department, Hamkorbank, Uzbekistan

For more information, please contact:
Priyanka Satapathy
Communications and Events Manager