ALTERNATIVE FINANCING AND MODERNIZATION OF FINANCIAL SERVICES TO PROMOTE EXPORT DIVERSIFICATION IN AFRICA

The article explores the relationship between financial services, private sector development and export diversification, with a special focus on financial factors that affect export diversification at the firm level. In many African countries, the existing financial structure may not provide more flexibility and resources to support the factors determining exports, which leads to a decrease in export potential and diversification of export baskets. The financial system in Africa mainly revolves around the banking sector, which accounts for more than 90 percent of financial sector assets. The author argues that the current financing structure of the banking sector may not be suitable for the growth of small firms and export indicators, which requires special financing mechanisms, such as venture capital, as well as financial technologies that can improve traditional credit channels and offer other promising channels to eliminate the financing deficit of micro, small and medium-sized enterprises.