AfDB, IFC and Citi Join Efforts to Support African Trade
The African Development Bank (AfDB) Group, Citigroup and International Finance Corporation (IFC), a member of the World Bank Group, have agreed to provide USD 175 million in trade financing for exporters and importers in Africa to help boost economic growth.
The financing is part of the Global Trade Liquidity Program, 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.
Under the transaction, Citigroup will originate a USD 175 million portfolio 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 40 percent of the portfolio to provide Citigroup with additional liquidity. The short-term, revolving nature of the assets financed could mean a USD 1-billion total impact in trade financing.
The transaction, part of a larger strategy to transform trade finance in Africa, addresses increased demand in the region.
Commenting the transaction, Tim Turner, AfDB Director, Private Sector Department, said: “The Bank’s proceed to the African trade facility with Citibank will play a key role in allowing the latter to leverage its credit and cross-border limits and significantly enhance trade credit availability across the continent. The Africa Trade Facility leverages Citibank’s large scale trade infrastructure and well established franchise in Africa, as well as its commitment to scale up its support to emerging markets issuing banks in Africa.”
Ghazi Ben Ahmed, AfDB Lead Trade Finance Officer, said: “The global trade finance market situation has shown signs of improvement since the second half of 2009 but some markets remain fragile and still require assistance. In this global context, the trade needs of African market banks call for an aggregation of considerable resources, and AfDB, other DFIs and global and regional financial institutions are still uniquely positioned to assist in partially meeting the challenge of improving the availability of trade finance.”
This article was originally posted on Africa Venture Capital Platform