Washington, D.C., June 12, 2006—The
International Finance Corporation’s Global Trade Finance Program has achieved
a milestone of $200 million in guarantees issued in its first 8 months
The program’s portfolio to date reveals that most of the trades are in
Sub-Saharan Africa (65 percent), a priority target of the trade initiative
and a region of strategic importance to IFC, the private sector arm of
the World Bank Group, followed by Latin America (approximately 20 percent),
Middle East and North Africa (6 percent), Eastern Europe (5 percent), and
South Asia (4 percent).
Hugh Baylis, the Global Trade Finance Program’s head of operations, said,
“We reached $100 million in less than 6 months and have reached the second
$100 million in only 2 months, which is an indication of the growing network
of banks joining the program and the market demand for the product.”
Baylis added: “We are also pleased with the strong developmental role
indicated by the number of transactions that have supported small and medium
enterprises—about 80 percent—as well as the amount of guarantees issued
to facilitate trade between emerging markets, some 44 percent.”
Through the program, which started operations in September, IFC provides
guarantee coverage of bank risk in emerging markets, where confirming banks
need risk mitigation to support their export clients because of limited
capacity for country and bank exposure.
To date, 28 banks have joined the program as issuing banks, permitting
IFC to provide risk mitigation in a variety of countries such as: Argentina,
Armenia, Bangladesh, Bolivia, Brazil, Kenya, Lebanon, Malta, Mauritania,
Mozambique, Nigeria, Pakistan, Russia, and Uganda. The confirming banks
total 71 so far.
Trends from the Global Trade Finance Program:
- Number of transactions: 231
- Average tenor: 5.8 months
- South-South transactions (trades between
emerging markets): 44 percent
- Small and medium enterprise transactions:
- Sectors covered include agriculture,
pharmaceuticals, industrial machinery, dairy products, natural fibers,
oil and gas, leather, edible oils, and electronics.
- The volume of the guarantees ranges
from $8,000 (import of mechanical equipment from the U.S. to Nigeria) to
$13.5 million (import of oil from India to Nigeria).
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.