BY MICHAEL EBOH
The International Finance Corporation, IFC, a member of the World Bank Group, has entered into a partnership with Citi Group to boost trade and economic development in emerging markets across the globe with the signing of a N158 billion (US$1 billion) risk-sharing facility.
According to a statement jointly signed by Michael Kurdyla of the IFC, Capucine Boncenne and Nina Das, both of Citi, the facility will stimulate the growth of trade, drive job creation and economic development in emerging countries.
They stated that Citi will use the funding to originate trade finance transactions in Africa, Asia, Central and Eastern Europe, Latin America, and the Middle East, enabling its bank clients to extend financing to local importers and exporters.
The funding, according to them, is expected to support emerging market trade flows of up to $6 billion through 2015.
The signing, the statement noted, marks the first extension of an existing facility under the IFC Global Trade Liquidity Program, adding that IFC and Citi initially launched a trade finance facility in October 2009.
The statement explained that the facility reached $900 million at its peak and supported $6 billion of emerging market trade over its three-year life, adding that the IFC-Citi facility financed more than 2,000 funded trade investment instruments through 92 banks in 23 developing countries.
The statement further noted that the facility extension will expand the availability of trade finance for clients in emerging markets over a three-year span through a 50-50 risk-sharing structure, with the IFC and partners, including other development finance institutions, contributing $500 million, while Citi will provide an additional $500 million.
Commenting on the deal, Naveed Sultan, Global Head of Treasury and Trade Solutions at Citi, said, "Citi's partnership with the IFC has been a tremendous success, helping to stimulate the recovery and growth of global trade in emerging markets.
"We look forward to continuing our partnership with banks, corporations, and the public sector across emerging markets to continue to stimulate global trade."
Also speaking, Georgina Baker, IFC Director for Global Trade and Supply Chain Solutions, said, "As the availability of global trade finance continues to decline, IFC is committed to working with Citi on innovative solutions like the Global Trade Liquidity Program to maintain and expand trade finance flows in the developing world.
"Citi has been one of IFC's most dedicated partners in trade finance, and IFC looks forward to continuing that partnership to benefit small emerging market firms that rely on trade to grow and create jobs."
The statement further noted that Citi was IFC's first partner bank under the Global Trade Liquidity Program, which was launched in 2009 to channel capital from banks and development finance institutions at a time of global scarcity in trade finance.
IFC, the statement explained, announced an extension of the program in 2012 to continue promoting international trade growth in emerging markets, including many of the world's poorest countries.
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