EVALUATING THE ROLE OF EXPORT CREDIT AGENCIES AND MULTILATERAL TRADE FINANCING INSTITUTIONS ON GLOBAL TRADE
Abstract
The aim of this study is to evaluate and assess the role of Export Credit Agencies (ECAs) and Multilateral Finance Institutions (MFIs) (proxy for Multilateral Trade Financing Institutions) on global trade, providing credit, guarantees, and risk-mitigation instruments that enable importers and exporters to transact in high-risk or liquidity-constrained markets. This study applies a mixed-methods approach combining content analysis of institutional reports, case studies, and empirical findings to evaluate their impact on international trade. Evidence at the firm level demonstrates that ECA interventions significantly increase export probability, transaction survival, and employment by alleviating financing frictions. Case studies, such as the temporary shutdown of the U.S. Export-Import Bank and the large-scale expansion of China’s Sinosure, highlight the catalytic as well as distortionary potential of ECAs. Similarly, MFIs such as the International Finance Corporation and the Multilateral Investment Guarantee Agency have played counter-cyclical roles during crises, mobilizing private-sector participation through trade-guarantee programs and infrastructure financing. However, aggregate effects remain heterogeneous, with concerns over crowding out, fiscal risks, and environmental externalities (OECD, 2023). Persistent global trade-finance gaps—estimated between US$2–2.5 trillion annually underscore the need for targeted, additional, and risk-sharing interventions. Lessons for emerging economies, including Nigeria, emphasize SME-focused instruments, blended finance models, trade-facilitation reforms, and ESG-sensitive conditionalities to maximize developmental impact. Overall, ECAs and MFIs remain indispensable in sustaining global trade flows, but their effectiveness depends on governance, additionality, and integration with broader policy reforms.
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