African Trade Finance Gets $300m Boost
- By Abimbola Tooki
- Published September 13th, 2010
- News
- Unrated
THE International Finance Corporation (IFC), Citigroup, and the African Development Bank (AfDB) have agreed to provide up to $300 million in trade financing for exporters and importers in Africa to help boost economic growth.
The financing is part of the Global Trade Liquidity Programme, a public-private partnership launched in July 2009 to support trade in developing markets and address the shortage of trade finance following the global financial crisis. Most Nigerian private business operators are not aware of this facility.
Under the programme, Citigroup will originate a portfolio of up to $300 million in trade finance transactions from banks across Africa, focusing on low-income countries. The local banks, in turn, will extend trade financing to importers and exporters. IFC and AfDB will jointly fund up to 40 percent of the portfolio to provide Citigroup with additional liquidity.
The short-term, revolving nature of the assets financed could mean a total impact of up to $1.5 billion in trade financing.
“The innovative structure of this transaction will significantly increase the supply of trade finance in Africa, helping create jobs and boost economic growth at a time when the region is still facing a severe credit shortage,” said Lars Thunell, IFC executive vice president and CEO. The transaction, part of a larger strategy to transform trade finance in Africa, addresses increased demand in the region.
The financing is part of the Global Trade Liquidity Programme, a public-private partnership launched in July 2009 to support trade in developing markets and address the shortage of trade finance following the global financial crisis. Most Nigerian private business operators are not aware of this facility.
Under the programme, Citigroup will originate a portfolio of up to $300 million in trade finance transactions from banks across Africa, focusing on low-income countries. The local banks, in turn, will extend trade financing to importers and exporters. IFC and AfDB will jointly fund up to 40 percent of the portfolio to provide Citigroup with additional liquidity.
The short-term, revolving nature of the assets financed could mean a total impact of up to $1.5 billion in trade financing.
“The innovative structure of this transaction will significantly increase the supply of trade finance in Africa, helping create jobs and boost economic growth at a time when the region is still facing a severe credit shortage,” said Lars Thunell, IFC executive vice president and CEO. The transaction, part of a larger strategy to transform trade finance in Africa, addresses increased demand in the region.
