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

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currency

With foreign exchange shortages plaguing sub-Saharan African economies, Bank One’s Head of Trade, Gerald Ndosi, explains what measures can be taken to overcome US dollar liquidity challenges, promote trade finance, and foster sustainable economic growth in the region

PORT LOUIS, Mauritius, June 20, 2023/APO Group/ — 

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.

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“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.

Firstly, commodity dependence can affect the volume of dollars available in African markets, as many countries in SSA heavily rely on commodity exports, such as crude oil, minerals, and agricultural products. Fluctuations in commodity prices, which are often denominated in US dollars, can lead to revenue volatility, and affect the availability of US dollars in the local markets.

Secondly, limited export diversification means that the concentration of exports in a few commodities or markets can limit foreign exchange earnings in US dollars. The lack of export diversification makes economies vulnerable to external shocks and reduces the inflow of US dollars, affecting liquidity in the local markets.

Limited access to international capital markets restricts their ability to address dollar liquidity shortages through external borrowing

Thirdly, high import dependence, which implies that sub-Saharan African countries often rely on imports for various goods and services – including essentials like food and fuel, can translate to a shortage of dollars as well. The need to pay for imports in US dollars puts pressure on their demand, especially when local currencies depreciate, or foreign exchange reserves are insufficient. Economic sanctions imposed by Western countries on Russia, including restrictions on its energy sector has contributed for the bulk of global oil price hikes over the last year, thus fuelling pressure on oil importing countries to source more dollars for import bill settlement.

Fourthly, capital outflows and debt servicing burdens can translate into a dollar drain, with SSA having experienced an exodus of capital due to factors like global economic conditions, changes in investor sentiment, and policy uncertainties, the servicing external debt obligations in US dollars can further strain dollar liquidity in the region.

Finally, limited access to international financial markets can compound the problem, as it means that some countries in SSA face challenges in accessing international financial markets and raising funds in US dollars. Limited access to international capital markets restricts their ability to address dollar liquidity shortages through external borrowing.

How can African economies overcome these challenges and promote trade finance?

Addressing these pressing challenges arising from the prevailing US dollar shortage and ensuring sustainable trade finance requires a mixed approach, putting into play multiple strategies such as:

  1. Economic Diversification, Export Promotion and Value Addition: Encouraging diversification of economies beyond commodities can reduce reliance on volatile export markets and enhance foreign exchange earnings, including US dollars. Likewise, promoting value addition in exports and expanding export markets can increase foreign exchange earnings in US dollars and reduce import dependence.
  2. Strengthening Local Currency Liquidity and Financial Institutions: Enhancing local currency liquidity through effective monetary policies, exchange rate stability, and deepening the local financial markets can reduce dependence on the US dollar for domestic transactions. On a related note, strengthening local financial institutions in Africa is essential for sustainable trade finance. By enhancing their capabilities and expanding their reach, these institutions can better support trade activities, provide liquidity, and facilitate financing options denominated in local currencies.
  3. Promoting Regional Integration and Local/Regional Currencies: Promoting regional economic integration and intra-regional trade can facilitate trade settlements in local currencies, reducing reliance on the US dollar for regional transactions. Here, African countries may explore using local currencies or regional currencies, such as the African Continental Free Trade Area (AfCFTA) digital currency, to facilitate intra-African trade. This would reduce reliance on the US dollar and mitigate the impact of US dollar liquidity challenges.
  4. Enhancing Financial Sector Resilience: Strengthening domestic financial institutions, improving risk management frameworks, and encouraging innovation in financial services can enhance the resilience of the financial sector and promote trade finance. African countries can work towards strengthening regional financial infrastructure, including payment systems, clearing mechanisms, and settlement platforms. Enhanced regional integration would foster efficient trade finance processes within Africa, reducing the need for US dollar-based transactions and minimising associated liquidity challenges.
  5. Collaborative Partnerships: Collaborating with international partners, including multilateral development banks and foreign investors is critical, as they can provide support through technical assistance, investment, and capacity building to address US dollar liquidity challenges in SSA. Further, Development Finance Institutions (DFIs) such as the African Development Bank and regional development banks, can play a crucial role in providing trade finance facilities to bridge the liquidity gap. These institutions can offer financial products tailored to African businesses, mitigating risks associated with US dollar liquidity challenges and supporting trade activities.
  6. Settlement in Alternative Currencies: India and China are the biggest trading partners with most of the sub-Saharan African countries and recently, the Indian Central Bank (RBI) has allowed 18 countries, including 6 countries in SSA (Kenya, Tanzania, Seychelles, Mauritius, Botswana, and Uganda) to settle their international trade transactions in rupees. This initiative will help in reducing demand pressure on the US dollar by providing an alternative currency for settlement of international trade transactions.
  7. Harnessing technological innovations: On an overarching note, technology-driven innovations, such as blockchain and digital currencies can offer alternative solutions for trade finance in Africa. Blockchain-based platforms can facilitate secure and transparent trade finance transactions, while digital currencies can streamline cross-border payments and reduce dependence on US dollar liquidity.

By adopting these measures and pursuing a comprehensive strategy, sub-Saharan African countries can work towards overcoming US dollar liquidity challenges, promoting trade finance, and fostering sustainable economic growth in the region.

Trade finance in Africa to overcome challenges for a bright, sustainable future

Thus, despite the challenges posed by US dollar liquidity constraints, there are promising avenues auguring well for the future of trade finance in Africa.

Indeed, through currency diversification, regional integration, and collaborative efforts, suitably synergised by technological innovations, African countries can navigate the challenges and seize opportunities to promote trade, economic growth, and financial stability within the continent.

Distributed by APO Group on behalf of Bank One Limited.

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Hong Kong rises to No.2 globally in competitiveness

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June 19, 2026

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Hong Kong

HONG KONG SAR – Media OutReach Newswire – 18 June 2026 – Hong Kong jumped one place to become the world’s second most competitive economy, according to the 2026 World Competitiveness Ranking published today (June 18) by the Swiss-based International Institute for Management Development (IMD). It is Hong Kong’s highest ranking since 2019, and builds on three consecutive years of improvement.

Welcoming the report, a spokesperson for the Hong Kong Special Administrative Region (HKSAR) Government said, “The World Competitiveness Yearbook (WCY) 2026 reaffirms Hong Kong as one of the most competitive economies in the world, and notes that Hong Kong’s rise to second sustains the strong upward trajectory from 2024 and 2025.”
In announcing the results, the IMD noted that, amid rising geopolitical tensions, competitive advantage hinges on credible institutions, predictable rules, enforceable commitments and public trust.

According to WCY 2026, Hong Kong’s rise reflects sustained performance across the four competitiveness factors measured. Among these factors, Hong Kong ranks second in “Government efficiency” and third in “Business efficiency”. “Infrastructure” and “Economic performance” rank eighth and 11th respectively.

As regards the various competitiveness sub-factors, Hong Kong tops the rankings in “Tax policy” and “Business legislation”, ranks second in “Finance”, third in “International trade”, “International investment”, “Management practices” and “Education”, and fourth in “Public finance” and “Basic infrastructure”.

“In the competitiveness factor ‘Government efficiency’, Hong Kong continues to rank second globally, reflecting the HKSAR Government’s ongoing efforts to promote free and open, stable, predictable and business-friendly economic policies, as well as the international community’s trust in Hong Kong’s legal and regulatory environment,” the spokesperson said.

“Hong Kong’s ‘Business efficiency’ is ranked third globally, reflecting the strong support for industry development rendered by our robust financial ecosystem, as well as the seamless alignment of the city’s business practices and environment with international best standards.”

Amid rapidly evolving geopolitical dynamics, Hong Kong, with its close connectivity to both the Chinese Mainland and the world under the “one country, two systems” principle, and its sound institutions, open markets and sustained investments in innovation, has become a “value hub” that offers both security and growth opportunities.

In fact, Hong Kong continues to excel in various international rankings including those for economy, finance, and talent. The International Monetary Fund has also given positive recognition to Hong Kong in recent months, and major credit rating agencies have successively reaffirmed Hong Kong’s credit ratings and ‘stable’ outlook.

“All these echo the WCY 2026 results,” the spokesperson said.

Currently, Hong Kong is formulating at full speed its first Five-Year Plan, to proactively align with the National 15th Five-Year Plan.

“With the staunch support of our country, the HKSAR Government will work together with all sectors of society to strengthen our role and function as a ‘super connector’ and ‘super value-adder’, with a view to better integrating into and serving the overall national development, achieving our own high-quality development, creating more new room for development for our people and businesses, as well as opening up new opportunities for global investors and enterprises,” the spokesperson said.

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2026 Hainan Cultural and Tourism Promotion Events Held in Hong Kong

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June 19, 2026

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Hong Kong

HONG KONG SAR – Media OutReach Newswire – 18 June 2026 – On June 16, the 2026 Hainan Cultural and Tourism Promotion Events, under the theme of “Sunny Hainan · Heart’s Desire,” were held in Hong Kong. Leaders from Hong Kong’s cultural and tourism authorities, heads of industry associations, and representatives of key cultural and tourism enterprises from home and abroad gathered to explore new opportunities for cooperation and draw up a blueprint for the industry’s future.

Liu Xiaoming, Governor of the People’s Government of Hainan Province, and Cheuk Wing-hing, Deputy Chief Secretary for Administration of the Government of the Hong Kong Special Administrative Region, attended the events and delivered speeches. During the promotional session, Chen Tiejun, Director of the Department of Tourism, Culture, Radio, Television and Sports of Hainan Province, unveiled the “Top Ten Calling Cards of Hainan Tourism,” which received enthusiastic responses and positive feedback from various sectors in Hong Kong. Attendees from Hong Kong unanimously agreed that Hong Kong and Hainan boast highly complementary cultural and tourism resources and immense potential for cooperation.

Since the launch of special customs operations of the Hainan Free Trade Port, its distinctive opening-up advantages, such as “zero tariffs, low tax rates, a simplified tax system” and “tariff exemption for value-added processing,” have become increasingly prominent. These policies have continuously made Hainan more attractive to businesses and opened up broader opportunities for Hong Kong investors and entrepreneurs.

On the same day, at the “Invest in the Free Trade Port, Share New Opportunities” Symposium for Hong Kong Enterprises held in Hong Kong, four cooperation agreements were formally signed, covering high-end commerce, cultural and tourism integration, and regional industrial coordination. Hong Kong business representatives expressed strong interest in deepening their presence in Hainan.

Hainan and Hong Kong share a long history of cooperation, and in recent years, a steady stream of favorable policies has been introduced. Since the signing of the Hainan-Hong Kong Memorandum of Cooperation in March 2025, bilateral cooperation has accelerated across the board. In 2025, goods trade between the two sides reached RMB 9.35 billion, increasing by more than two times from 2020. A total of 793 new Hong Kong-funded enterprises were established in Hainan, a year-on-year increase of 21.5%. Hainan has also issued offshore RMB bonds in Hong Kong for four consecutive years, with a cumulative total of RMB 18 billion. Currently, an average of four direct flights operate daily between Hong Kong and Hainan, with the fastest travel time under two hours, facilitating the rapid emergence of the “Hainan-Hong Kong Living Circle.”

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Hong Kong universities scale global heights, cementing education hub status

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1 day ago

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June 19, 2026

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Hong Kong

HONG KONG SAR – Media OutReach Newswire – 19 June 2026 – Hong Kong universities continue to excel on the international stage with five institutions ranked among the world’s top 100 and, for the first time, two in the top 20 of the 2027 World University Rankings published by Quacquarelli Symonds (QS) on June 18.

A spokesman for Hong Kong’s Education Bureau (EDB) said that with the Hong Kong Special Administrative Region (HKSAR) Government’s full commitment to developing Hong Kong into an education hub, coupled with the support of a series of policy measures, the city’s higher education system has again excelled.

Announcing the results, QS said in a press release that Hong Kong “emerges as Asia’s most improved higher education system for the second consecutive year, and the second most improved globally among systems with three or more ranked universities”.

The University of Hong Kong (HKU) maintained its position at 11th in the world; The Chinese University of Hong Kong (CUHK) rose 14 places to 18th; The Hong Kong University of Science and Technology rose 11 places to 33rd; and The Hong Kong Polytechnic University climbed four places to 50th, entering the world’s top 50 for the first time. Also among the top 100 is City University of Hong Kong, which improved 11 places to 52nd.

In the latest Best Global Universities Rankings published by the U.S. News & World Report just days ago, multiple Hong Kong universities also demonstrated exceptional international competitiveness, with 20 subjects placing in the global top 10. Notably, CUHK, HKU, and The Education University of Hong Kong swept the global top three spots for the Best Global Universities for “Education and Educational Research”, underscoring the city’s prowess in cultivating talents and conducting academic research.

“These achievements fully affirm the effectiveness of the HKSAR Government’s steadfast investment in education and its full support through the University Grants Committee (UGC) for institutions to continuously innovate, optimise, expand capacity, and enhance quality. The significant year-on-year rise in the overall rankings of our institutions further validates Hong Kong’s strong appeal as a premier hub for international high-end talent,” the EDB spokesman said.

“The stellar performance of UGC-funded universities in the international rankings is by no means accidental. On one hand, it relies on the tireless efforts of all institutions to actively recruit world-class scholars and invest in infrastructure. On the other hand, the HKSAR Government’s stable resource investment, clear and supportive policy guidance, as well as the rigorous quality assurance implemented through the University Accountability Agreements, are also of paramount importance.”

The Government will continue to promote the internationalisation and diversification of post-secondary education, which aims to not only enhance Hong Kong’s development momentum but also make proactive contributions to the nation’s development, the spokesman said.

The strength demonstrated by Hong Kong’s higher education system aligns perfectly with the strategic goals set out in the National 15th Five-Year Plan to build a leading nation in education, technology, and talent.

To support the post-secondary education sector to grow bigger and stronger, the Government has raised the admission ceiling for non-local students in taught programmes at funded post-secondary institutions to 50 per cent, and increased the over-enrolment ceiling for self-financing places in funded research postgraduate programmes to 120 per cent, among other measures.

Meanwhile, the Government is promoting the “Study in Hong Kong” brand. The Task Force on Study in Hong Kong, in collaboration with major institutions, is stepping up promotion of Hong Kong’s excellent academic, research, and international collaboration resources on the Chinese Mainland and overseas. It also aims to attract outstanding talent from all over the world through initiatives such as expanding the Belt and Road Scholarship.

 

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