Trade Financing in Emerging Markets

Businesses need capital to initiate trades, drive growth, and produce profit, but unfortunately, not all companies can access to capital easily. Small and medium-sized enterprises (SMEs), although critical to the global economy, typically have trouble funding trades because of a lack of creditworthiness. This problem worsens for SMEs in emerging markets in volatile economies with political instability (“Trade finance and SMEs” 2016, p.11-21). In this study, we analyze how third-party trade finance companies can help finance trades more easily for SMEs in eight (8) emerging markets: Kenya, Rwanda, Ethiopia, Chile, Peru, Thailand, Cambodia, and Indonesia. We use a unique source referred to as ABC Company which operates in Kenya and Rwanda currently to examine the success of this model. Then, we make recommendations for new and existing companies in the third-party trade financing market.