Poor access to letters of credit (L/Cs) and a lack of trade finance in general is impacting on global development, according to the World Trade Organisation's (WTO's) director general, Roberto Azevêdo.

A lack of capacity in the financial sector is particularly having a negative impact on the trading potential of poor countries, the WTO's sixth director general argues in a column written for the Inter Press Agency.

Negative impact

Azevêdo argues that a lack of access to the international financial system is limiting the ability of poorer countries, some of them with significant potential, to make use of what he describes as simple instruments such as L/Cs.

This, he says, has an impact on their potential trading ability.

Capacity diminished

Whilst the supply of trade finance has returned to near-normal levels since the financial crisis in major markets, this is not the same for poorer countries, according to the director general.

He maintains that poorer countries' capacity to trade internationally has diminished.

This, Azevêdo says, is primarily due to increased regulatory scrutiny, which motivates many institutions to both lower their risk appetites and remain selective when it comes to which markets they work in, often opting to focus on their more established customers.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.