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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 of operations.
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
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Number of transactions: 231
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Average tenor: 5.8 months
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South-South transactions (trades between emerging markets): 44 percent
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Small and medium enterprise transactions: 80 percent
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Sectors covered include agriculture, pharmaceuticals, industrial machinery, dairy products, natural fibers, oil and gas, leather, edible oils, and electronics.
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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
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