Boosting Trade Through Finance: WTO and IFC Spotlight Access Challenges and Growth Potential in Latin America

The report underscores the critical role that Trade and Supply Chain Finance (TSCF) plays in enabling international trade, especially for developing nations.

A new joint report by the World Trade Organization (WTO) and the International Finance Corporation (IFC), titled “Trade Finance in Central America and Mexico,” was officially launched on April 29 in Mexico City. The launch event was led by WTO Deputy Director-General Johanna Hill and IFC Global Director Nathalie Louat. This is the third installment in a series focused on enhancing trade finance in developing economies and outlines the stark challenges and transformative opportunities that lie ahead for Guatemala, Honduras, and Mexico.

The report underscores the critical role that Trade and Supply Chain Finance (TSCF) plays in enabling international trade, especially for developing nations. Currently, TSCF supports:

• 8% of Mexico’s total goods trade

• 12% of Guatemala’s

• 10% of Honduras’s

These figures pale in comparison to advanced economies, where 60% or more of goods trade is backed by trade finance. Alarmingly, in Mexico, only about 25% of firms involved in merchandise imports and exports have access to financing—among the lowest access rates globally. Similar bottlenecks are evident in the other two countries, albeit with some progress noted.

Yet, the report also offers a compelling vision of what could be achieved with targeted interventions. Model-based projections show that doubling TSCF coverage and aligning financing costs with global standards could boost:

• Honduras’s trade by 8.9%

• Guatemala’s trade by 7.8%

• Mexico’s trade by 7.4%

In total, this would amount to an additional $90 billion in trade flows, a transformative opportunity for the region.

Inclusion, Innovation, and Infrastructure: Pathways to Trade Growth

The findings come amid ongoing efforts to close a widening global trade finance gap, estimated by the Asian Development Bank at $2.5 trillion in 2023, disproportionately affecting developing economies. DDG Johanna Hill remarked that “inadequate access to trade finance functions as a prohibitive trade cost,” severely limiting the participation of many businesses, especially micro, small and medium enterprises (MSMEs) and women-owned firms.

She added, “Trade finance is heavily concentrated. Too few banks are directing too little finance to a small number of large traders. More inclusive access is essential not just for boosting trade, but for enabling socioeconomic inclusion through trade.”

The report’s policy recommendations call for:

• Regulatory harmonization across borders

• Digital innovation, including adoption of fintech solutions

• Improved risk assessment frameworks

• Expanded support for small and women-owned firms

These actions, the report emphasizes, should be paired with robust support from development banks and multilateral institutions—including capacity building, risk-sharing mechanisms, and liquidity support.

Strategic Collaboration: A Roadmap for Future Action

This publication concludes a trilogy of reports initiated through the 2021 joint statement by WTO Director-General Ngozi Okonjo-Iweala and IFC Managing Director Makhtar Diop. The first report, launched in 2022, focused on West Africa (Côte d'Ivoire, Ghana, Nigeria, Senegal), while the second, released during 2023–24, covered the Mekong region (Cambodia, Lao PDR, Viet Nam).

At the Mexico City event, DDG Hill highlighted that the WTO remains committed to advancing trade finance solutions through a range of instruments, including:

• The WTO Trade Facilitation Agreement

• Support for investment facilitation

• Promoting digital technologies to streamline trade processes

"Reducing trade costs—be it through better shipping logistics, faster border clearance, or affordable financing—is paramount for global competitiveness," she stressed. In this light, digital transformation is no longer optional but essential for countries aiming to improve their trade ecosystems.

Next Steps and Institutional Support

Following the report presentation, a high-level panel discussion took place featuring representatives from the WTO, IFC, the International Chamber of Commerce (ICC), the Mexican government, and the Instituto Tecnológico Autónomo de México (ITAM). The discussion emphasized practical measures to implement the report’s recommendations and deepen stakeholder collaboration.

Concluding her address, DDG Hill reiterated the WTO’s openness to continue working with its members and partners: “We are at your disposal for promoting trade finance solutions. Efforts like today’s play a crucial role in bridging trade finance gaps and advancing the broader goals of economic diversification, inclusion, and digital transformation.”

With the completion of this three-part series, the WTO and IFC have laid a robust foundation of empirical insights and actionable policy recommendations. Now, the focus shifts to implementation—turning analysis into action and ensuring that trade finance becomes an engine of inclusive growth for the developing world.