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Three-Year Facility Could Net $40 Million in Trade Finance for Algerian Firms
Washington D.C., April 12, 2002
—The International Finance Corporation, the private sector development arm of the World Bank Group, has committed a revolving trade enhancement facility designed to benefit private sector Algerian importers for an amount that could reach up to US$40 million. The three-year confirmation line, to be managed by BNP Paribas Paris (BNPP), 50 percent of which will be guaranteed by IFC, will provide Algerian companies–mostly small and medium businesses–access to letters of credit through eligible Algerian banks.
“Algerian companies need effective credit options to help them meet the demands of today’s market,” said Sami Haddad, IFC Director for Middle East and North Africa. “This trade enhancement facility gives them the flexibility in trade terms necessary for them to grow and prosper.”
The facility will provide local commercial banks with access to confirmation of Letters of Credit (L/Cs) with tenors of up to 24 months. The facility will be structured as a risk sharing agreement between IFC and BNPP, whereby IFC would guarantee half of the exposure of BNPP, which will act as the confirming bank on the L/Cs.
In addition to supporting small and medium-sized businesses, the trade enhancement facility will contribute to building stronger confidence in the Algerian private and commercial banking sectors.
The IFC investment reflects the Corporation’s commitment to supporting the development of the Algerian private sector by supporting small and medium-sized businesses through local financial institutions. With a view to help strengthen the private sector, IFC has also invested in two commercial banks, a leasing company, and an investment bank in Algeria.
BNP Paribas, IFC’s partner in the trade enhancement facility, is the leading listed banking group in France and the third largest banking group in terms of market capitalization in the Euro zone. BNPP has wide experience in Algeria and the Middle East. BNPP also has a full-fledged branch in Algiers.
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, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through the close of the last fiscal year on June 30, 2001, IFC committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion.
