* Three-Year Facility Could Net $40 Million
in Trade Finance for Algerian Firms
Washington D.C., April 12, 2002—The International Finance Corporation,
the private sector development arm of the World Bank Group, has committed
a revolving trade enhancement facility designed to benefit private sector
Algerian importers for an amount that could reach up to US$40 million.
The three-year confirmation line, to be managed by BNP Paribas Paris
(BNPP), 50 percent of which will be guaranteed by IFC, will provide Algerian
companies–mostly small and medium businesses–access to letters of credit
through eligible Algerian banks.
“Algerian companies need effective credit options to help them meet the
demands of today’s market,” said Sami Haddad, IFC Director for Middle
East and North Africa. “This trade enhancement facility gives them
the flexibility in trade terms necessary for them to grow and prosper.”
The facility will provide local commercial banks with access to confirmation
of Letters of Credit (L/Cs) with tenors of up to 24 months. The facility
will be structured as a risk sharing agreement between IFC and BNPP, whereby
IFC would guarantee half of the exposure of BNPP, which will act as the
confirming bank on the L/Cs.
In addition to supporting small and medium-sized businesses, the trade
enhancement facility will contribute to building stronger confidence in
the Algerian private and commercial banking sectors.
The IFC investment reflects the Corporation’s commitment to supporting
the development of the Algerian private sector by supporting small and
medium-sized businesses through local financial institutions. With
a view to help strengthen the private sector, IFC has also invested in
two commercial banks, a leasing company, and an investment bank in Algeria.
BNP Paribas, IFC’s partner in the trade enhancement facility, is the leading
listed banking group in France and the third largest banking group in terms
of market capitalization in the Euro zone. BNPP has wide experience
in Algeria and the Middle East. BNPP also has a full-fledged branch
IFC’s mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people's lives. IFC
finances private sector investments in the developing world, mobilizes
capital in the international financial markets, and provides technical
assistance and advice to governments and businesses. Since its founding
in 1956 through the close of the last fiscal year on June 30, 2001, IFC
committed more than $31 billion of its own funds and arranged $20 billion
in syndications for 2,636 companies in 140 developing countries. IFC’s
committed portfolio at the end of FY01 was $14.3 billion.