The Promotion of Institutional Coherence in the Trade, Finance and Investment Ecosystem

This policy brief argues that the global trade, finance, and investment ecosystem is fragmented and inefficient, which exacerbates the trade finance gap for African SMEs. It calls for the G20 to lead institutional reforms to align global governance with the UN SDGs and African regional priorities, proposing a G20–Africa Trade Guarantee Fund and improved coordination platforms to reduce systemic inefficiencies.

• The global trade, finance, and investment ecosystem is characterized by extreme complexity and fragmentation, consisting of roughly 200 organisations including the Bretton Woods institutions, multilateral development banks (MDBs), and various regulatory bodies. These entities often operate in silos with divergent mandates, leading to contradictory policies and inefficient resource allocation.
• There is a significant global trade finance gap, which reached $2.5 trillion in 2023. This gap is most acute for small and medium-sized enterprises (SMEs) in Africa, where 40% of trade finance applications are rejected, compared to a global average of 17%. This disparity is driven by inconsistent risk assessment frameworks, poor coordination between global and African financial institutions, and the 'de-risking' practices of international banks due to varying Anti-Money Laundering/Know Your Customer rules.
• Institutional fragmentation leads to a duplication of effort and wasted resources, particularly in research and data collection. Major institutions such as the IMF, World Bank, WTO, and UNCTAD produce reports on global trade finance gaps using methodologies that rarely converge, and there is a lack of collaboration between data sets like the World Bank's Global Findex and FinScope and organisations like FinMark Trust.
• Geopolitical tensions and the use of 'economic statecraft'—such as the US application of tariff measures—have increased regulatory friction and further fragmented the ecosystem. This has led to the rise of 'friendshoring' and 'nearshoring' to mitigate risks, which may further marginalise countries that cannot participate in these new strategic alliances, particularly in Africa.
• Achieving institutional coherence is essential for meeting the UN Sustainable Development Goals (SDGs) and regional objectives like Agenda 2063 and the African Continental Free Trade Area (AfCFTA). Coherence would involve harmonising environmental, social, and governance (ESG) criteria and aligning trade liberalisation with financial regulations to ensure emerging economies are not excluded from global value chains.
• The author recommends that South Africa leverage its position in the G20 to advocate for structural reforms in the IMF, World Bank, and WTO to increase transparency and Africa's representation. Specific proposals include the creation of a G20–Africa Trade Guarantee Fund to harmonise risk-sharing instruments and the establishment of a knowledge and coordination platform to bridge gaps between trade finance and development finance.

APA

Ramsamy, P. (2025). The Promotion of Institutional Coherence in the Trade, Finance and Investment Ecosystem. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2025/05/Policy-Note_14_G20-trade-finance-investment_Ramsamy.pdf

Chicago

Ramsamy, Prega. The Promotion of Institutional Coherence in the Trade, Finance and Investment Ecosystem. South African Institute of International Affairs, 2025. https://saiia.org.za/wp-content/uploads/2025/05/Policy-Note_14_G20-trade-finance-investment_Ramsamy.pdf.

Wikipedia

{{cite report |last1=Ramsamy |first1=Prega |title=The Promotion of Institutional Coherence in the Trade, Finance and Investment Ecosystem |publisher=South African Institute of International Affairs |date=14 May 2025 |url=https://saiia.org.za/wp-content/uploads/2025/05/Policy-Note_14_G20-trade-finance-investment_Ramsamy.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ramsamy2025promotion, author = {Ramsamy, Prega}, title = {{The Promotion of Institutional Coherence in the Trade, Finance and Investment Ecosystem}}, institution = {South African Institute of International Affairs}, year = {2025}, month = may, url = {https://saiia.org.za/wp-content/uploads/2025/05/Policy-Note_14_G20-trade-finance-investment_Ramsamy.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }