High pricing is pushing traders in many low-income countries away from being able to afford trade finance, according to a new survey by the ICC.

The ICC Trade and Finance Global Survey 2011 found that the price of import finance was particularly prohibitive for low-income countries.

However, the report did find that the average price for letters of credit in large emerging economies dropped from 150-250 basis points in the 2010 survey to 70-150 basis points in this year’s study.

Latin America and large sections of Asia and Africa continued to pay high prices for trade finance, as well as experiencing stressed markets.

“What is needed now is a more targeted use of resources, focusing on the poorer countries and small and medium-sized enterprises around the world,” says Pascal Lamy, director-general of the World Trade Organisation.

Development banks have stepped in to fill much of the gap in emerging economies and as yet have not had to face a single loss as a result of non-payment or default.

The development banks have been particularly important.”

“The development banks have been particularly important because they help build relationships with banks in emerging markets which cannot get off the blocks in the international markets,” Vincent O’Brien, chair of the ICC market intelligence advisory group, explains to GTR.

On the positive side, the survey confirmed the rebound of trade flows globally, driven by increased trade in North America and Europe.

In these developed economies, liquidity and trade finance availability is returning to normalised pre-crisis levels, as is the pricing and risk appetite.

Messaging firm Swift has also provided the ICC with the volume of messages sent and received throughout all regions.
Africa showed the highest growth of import messages between 2009 and 2010, at 21.2%, followed by Asia Pacific with 10.1% and Latin America with 9.7%.