The International Finance Corporation (IFC) has joined hands with Absa Bank Limited in a combined investment of $250 million through its Global Trade Liquidity Programme (GTLP) to boost access to trade finance in sub-Saharan Africa, especially in low income and fragile countries, supporting a vital driver of growth that has been strained by the COVID-19 pandemic.
The investment will channel credit to a portfolio of trade transactions which is expected to facilitate up to $1.6 billion in trade over the next three years as it will support the African financial institution’s commitment to increase trade finance accessibility with up to 80 percent of financing.
The IFC’s GTLP programme was established in 2009 to provide financing to partner banks, helping them minimize risk in trade financing and facilitate increased trade in emerging markets, especially for underserved importers and exporters and small businesses.
Since the launch, the programme has supported over $75 billion in trade volumes globally through almost 27,000 transactions of which more than $24 billion has represented trade in low-income countries.
Commenting on the signing between IFC and Absa Bank, Bohani Hlungwane, managing principal, head of trade & working capital sales (pan Africa) at Absa, said, “Absa is delighted to announce the signing of a $250 million facility under IFC’s GTLP programme. This programme builds on our existing relationship with IFC, further solidifying our commitment to providing access to trade finance and closing the trade finance gap on the African continent.”
Also speaking on the joint trade finance, Manuel Reyes-Retana, IFC’s regional industry director for the financial institutions group in Africa, said, “The partnership with Absa will play a key role in the response to and recovery from the COVID-19 pandemic by supporting trade finance that is essential for economic recovery and growth in sub-Saharan African markets. GTLP provides much-needed trade financing, helping banks to increase their credit limits, manage risk and support small and medium-sized businesses in challenging emerging markets.”
Under the GTLP risk-sharing model, IFC will guarantee a pool of eligible trade transactions issued by Absa Bank by up to 50 percent, with the remaining amount being guaranteed by Absa Bank.
The souls of our ancestors will now rest in peace!