British International Investment (BII) and Citi have teamed up to launch a $100 million risk-sharing facility aimed at enhancing trade finance availability for small and medium enterprises (SMEs) and corporates across frontier and emerging African markets. The initiative, announced during the World Bank’s Spring Meetings in Washington, seeks to address the financing challenges faced by businesses in these regions, particularly those with high potential but limited access to capital.
The partnership between BII, the UK’s development finance institution, and Citi, a global banking leader, aims to bolster liquidity among African lenders and facilitate imports of essential commodities such as wheat, fertiliser, rice, and sugar, as well as vital equipment and machinery. The facility will extend support to over 200 local banks within Citi’s network, empowering them to provide financial assistance to businesses in underserved markets including Benin, Cameroon, Côte d’Ivoire, Rwanda, Tanzania, Uganda, and Zambia.
Nick O’Donohoe, CEO of BII, emphasized the significance of the investment in addressing complex issues like food security in Africa and supporting local businesses in expanding their operations. The facility reflects BII’s commitment to extending liquidity solutions to strategic sectors, enabling businesses to strengthen supply chains and accelerate essential trade.
Stephanie Von Friedeburg, Head of DFI Strategic Partnerships at Citi, highlighted the partnership’s role in strengthening trade and food security in African economies. By leveraging Citi’s extensive experience and BII’s regional expertise, the collaboration aims to facilitate critical investments that drive economic growth and development across the continent.
The launch of the risk-sharing facility builds on the successful collaboration between BII and Citi, following their previous initiatives to support SMEs and corporates in Africa. The facility is expected to mitigate the acute foreign currency shortage in the region, providing much-needed liquidity to local banks and enabling them to meet the trade finance needs of businesses amid challenging economic conditions.
As Africa grapples with widening trade finance gap exacerbated by the COVID-19 pandemic and geopolitical tensions, the BII-Citi partnership represents a significant step towards bridging these disparities and fostering inclusive economic growth. The investment aligns with the United Nations’ Sustainable Development Goals, particularly those related to poverty alleviation, hunger eradication, and economic prosperity, reaffirming the commitment of both organizations to driving positive impact in Africa.
The collaboration between BII and Citi comes at a crucial juncture for African economies, which have been grappling with the economic fallout of the COVID-19 pandemic and geopolitical uncertainties. As trade finance gaps widen and access to capital becomes increasingly limited, SMEs and corporates face significant hurdles in sustaining their operations and expanding their businesses. The $100 million risk-sharing facility signals a concerted effort to address these challenges head-on, providing much-needed financial support to businesses across the continent.
By focusing on underserved markets such as Benin, Cameroon, and Rwanda, the initiative aims to unlock the growth potential of local enterprises and drive economic development in these regions. Access to trade finance is essential for facilitating the importation of crucial commodities and equipment, which in turn, supports key industries and strengthens supply chains. Through targeted interventions like this facility, BII and Citi are laying the groundwork for sustainable growth and resilience in African economies, fostering job creation and poverty reduction.
Moreover, the partnership underscores the importance of collaboration between development finance institutions and private sector entities in advancing socio-economic progress. By leveraging their respective strengths and resources, BII and Citi are poised to make a meaningful impact on the ground, empowering businesses to navigate complex financial landscapes and seize opportunities for growth. As the facility takes effect and funding reaches businesses in need, the ripple effects of this collaboration are expected to be felt far and wide, driving inclusive prosperity and advancing the shared goal of a thriving African continent.