World Trade Organization Counsellor Marc Auboin discusses how supply chain finance enable SMEs to grow.
How does supply chain finance support SMEs?
SOT: Marc Auboin
Counsellor, Economic Research & Statistics Division
World Trade Organization
“We know that 60% of world trade are currently a supply chain related trade, which is essentially trade in parts and components and intermediate products that eventually are being added from place to place to do the finished products.
So supply chain finance is financing that particular process. The problem is that while the buyers or the main suppliers do have the finance, the small- and medium-sized enterprises, that are at the end of this chain or maybe at the beginning of this chain and maybe at the beginning of all the value added, are generally not well-served. It may be in a developing country where the banks are not aware or professional in providing for finance, or the company may not have the credentials, experience, the books, or the credit record.
And so supply chain finance arrangements, which normally exist in a financial world are much less developed in the developing world, and for this reason programs such as the ADB’s is very important because it allows SMEs to put their foot into the supply chain."