Today the World Trade Board unveiled the Trade Roadmap, a framework to address the lack of trade finance available to micro and small businesses (MSMEs) as part of a program to address financial inclusion. It’s an area where DLT and other technologies can play a significant role. The Board is looking for feedback.
The trade finance gap for MSMEs was estimated at $1.5 trillion for years but increased to $2 trillion in 2020. MSMEs represented 23% of applications that year but 40% of rejections.
A key reason is the high perceived risk of financing small businesses. That’s a critical area that technology can help to address. Potential solutions may or may not use blockchain. For example, centralized supply chain finance solutions have already helped some SMEs rely on their customer’s creditworthiness combined with the confirmation that the customer will pay the SME’s invoice.
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