Access to trade finance is one of the most significant binding constraints to the growth of African trade. Across Africa, this constraint has been exacerbated by a shortage of US dollar liquidity, since the dollar remains the preeminent currency used to settle trade transactions.
A paper written by Gloria Li (TCX / Johns Hopkins University) argues that if development finance institutions increase the supply of synthetic local-currency trade-finance instruments, this could shield companies from risks associated with currency depreciation and boost both access to trade finance and economic growth in Africa. Please find the paper here.