IFC, Citigroup, AfDB Provide Up to $300 Million to Boost Trade in Africa
IFC, a member of the World Bank Group, Citigroup, and the African Development Bank 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 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 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.
“Citigroup is delighted to join IFC and AfDB to help expand trade in Africa. The nature of the public-private partnership promotes investment in sectors such as agriculture that are vital to the African economy,” said John Ahearn, Head of Global Trade of Citigroup. “Our global reach and expertise in capital markets and trade flows ideally positions us to provide financial services to support trade in African economies.”
Donald Kaberuka, President of the African Development Bank, said, “The market situation for trade finance, by and large, had been improving since the beginning of the financial crisis—although that assessment should be mitigated, particularly regarding low income and weak economies in Africa. This joint program will address these needs and expand AfDB’s role as a development institution. It will allow us to have a broader impact by promoting trade, one of the cornerstones of development in Africa.”
This article was originally posted on Sustainable Development Africa Platform