Washington, D.C. May 19, 2003—The International
Finance Corporation and Banque Belgolaise have signed an agreement to set
up a two-year $32 million West Africa Trade Enhancement Facility. The
facility is designed to help private sector West African importers and
exporters with financing to import capital goods and raw materials.
IFC will guarantee letter of credit confirmations made by Banque Belgolaise
to eight West African banks. IFC’s guarantee will cover up to 50 percent
($16 million) of the letter of credit amount.
The facility will create a more competitive and lower-cost letter of credit
market for importers and allow local participating banks to be more competitive
vis-à-vis multinational banks. It will initially include banks in six countries:
Burkina Faso; Guinea; Cote d’Ivoire; Benin; Sénégal; and Cameroon. IFC’s
exposure to any issuing bank will not exceed 50 percent of the total letter
of credit amount.
According to Mr. Karl Voltaire, IFC’s director for Global Financial Markets,
the facility will “increase the availability of trade finance to local
importers by supplementing country limits available to commercial banks,
promote confidence in the private banking sector, and build the reputation
of the selected banks in the international market.”
Ms. Haydee Celaya, IFC’s director for Sub-Saharan Africa, added, “The
facility will allow IFC to reach a large number of importers, particularly
among small and medium enterprises. Assuming the average transaction time
is four months, the facility will turn over three times a year, resulting
in the provision of $192 million for trade finance purposes, if fully utilized
over the two-year period.”
Banque Belgolaise, which has experience in trade finance in Africa, has
offices in 15 African countries where it provides commercial, merchant,
and private banking services. The bank is headquartered in Brussels with
branches in London and Paris. Its strategy is to progressively take a majority
stake in selected countries and increase trade finance volumes. In
1998, Banque Belgolaise was purchased by the Brussels-based Fortis Bank
(64 percent) with the balance held by public shareholders (34 percent)
and Degroof Bank (2 percent). The bank’s French subsidiary, based
in Paris, will act as the confirming bank for the facility.
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, helps clients improve
social and environmental sustainability, and provides technical assistance
and advice to governments and businesses. Since its founding in 1956 through
FY02, IFC has committed more than $34 billion of its own funds and arranged
$21 billion in syndications for 2,825 companies in 140 developing countries.
IFC's worldwide committed portfolio as of FY02 was $15.1 billion for its
own account and $6.5 billion held for participants in loan syndications.