Washington, D.C., March 29, 2006—The
International Finance Corporation’s Global Trade Finance Program has achieved
a milestone of $100 million in guarantees and 100 transactions in less
than six months since the launch of the program last September.
Most of the trades are in Sub-Saharan Africa, a region of strategic importance
to IFC, the private sector arm of the World Bank Group. However,
the program is global and the network of banks is spreading worldwide,
covering Latin America, the Middle East, North Africa, and South Asia.
Hugh Baylis, the Global Trade Finance Program’s head of operations, said,
“The majority of trades are flowing to Nigeria, but activity is also picking
up in Mauritania and Kenya, as well as in other parts of the world. As
a development institution, we are pleased that almost half of our guarantees
issued on behalf of African banks support trades between developing countries
and that the majority cover transactions of less than $1 million.”
Through the program, IFC provides guarantee coverage of bank risk in emerging
markets, where confirming banks—typically in North America, Europe, and
the more advanced of the developing countries—need risk mitigation to
support their export clients because of limited capacity for country and
To date, 22 banks have joined the program as issuing banks, permitting
IFC to provide risk mitigation in a variety of countries such as: Argentina,
Bangladesh, Bolivia, Kenya, Lebanon, Malta, Mauritania, Nigeria, Pakistan,
and Russia. Further coverage is expected soon for banks in Colombia,
the Dominican Republic, Egypt, Jamaica, Jordan, Morocco, the Philippines,
Rwanda, Tanzania, Ukraine, and Vietnam. The confirming banks total 54 so
Interesting trends are emerging from the Global Trade Finance Program:
Number of transactions: 112
Average tenor: 5.5 months
South-South transactions (trades between emerging markets): 38 percent
Small and medium enterprise transactions: 74 percent
Sectors covered include agriculture, pharmaceuticals, industrial machinery,
dairy products, natural fibers, oil and gas, leather, edible oils, and
The volume of the guarantees ranges from $10,000 (import of automobiles
from the Czech Republic to Nigeria) to $13.5 million (import of oil from
India to Nigeria).
Global Trade Finance Program in Latin America
In Latin America, 90 percent of the guarantees have been issued in Brazil
for a total of $8 million in pre-export financing. The guarantees
have mainly supported exports of agricultural commodities (frozen meat,
sugar, shrimp, wheat, cashew nuts, and chicken) but also paper, plastic,
metals, and minerals. The exports have gone to Europe and South Africa,
and several countries in the region such as Argentina, Mexico, and Uruguay.
The pipeline in this region is growing steadily and includes banks in Colombia,
Dominican Republic, Ecuador, Nicaragua, and Paraguay.
Global Trade Finance Program in South Asia
In South Asia, the program has begun will with $5 million in commitments
in Bangladesh. The majority of the guarantees issued are South-South trades
such as an import of phosphoric acid from the Philippines to Bangladesh
or rock phosphate from Morocco.
IFC is in active discussions with a number of banks in Indonesia, Nepal,
the Philippines, and Sri Lanka to join the program.
Global Trade Finance Program in Africa
Africa has been the main focus of the program, particularly Nigeria, where
$95 million has been committed, followed by Mauritania with $5 million
and Kenya with $1 million. Almost half of the guarantees issued for African
banks—46 percent—are South-South deals, and 80 percent are small and
medium enterprise transactions (less than $1 million). The sector that
has benefited the most from the program in this region has been the automotive
(including buses and spare parts), but IFC has also supported imports of
resin from Thailand to Nigeria, gasoil (heating oil) to Mauritania, and
industrial machinery from Singapore to Kenya, among others.
The prospects of expansion in Africa are robust, with coverage expected
in the Democratic Republic of Congo, Ghana, Rwanda, Senegal, Sierra Leone,
Tanzania, and Uganda.
The International Finance Corporation is the private sector arm of the
World Bank Group and is headquartered in Washington, D.C. IFC coordinates
its activities with the other institutions of the World Bank Group but
is legally and financially independent. Its 178 member countries
provide its share capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment
in developing and transition 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, helps
clients improve social and environmental sustainability, and provides technical
assistance and advice to governments and businesses. From its founding
in 1956 through FY05, IFC has committed more than $49 billion of its own
funds and arranged $24 billion in syndications for 3,319 companies in 140
developing countries. IFC’s worldwide committed portfolio as of FY05 was
$19.3 billion for its own account and $5.3 billion held for participants
in loan syndications. For more information, visit www.ifc.org.