…The facility targets underserved African markets such as Benin, Cameroon, Tanzania and Uganda.
…The funding helps to accelerate the flow of key agricultural commodities, and use of machinery and solutions that strengthen food security in vulnerable economies.
…This initiative seeks to address the lack of liquidity among Africa’s commercial banks.
WED APRIL 24 2024-theGBJournal|British International Investment (BII), the UK’s development finance institution and impact investor, today announced the signing of a $100 million risk-sharing facility with Citi to support the trade finance needs of SMEs and corporates in frontier and emerging African economies.
The initiative was announced during a signing ceremony in Washington at the World Bank’s Spring Meetings and is expected to provide a boost to businesses with high-potential but limited by a lack of finance.
The investment seeks to address the critical lack of foreign currency in the region by providing trade finance liquidity to Citi’s extensive network of commercial banks, enabling financial institutions to increasingly support African businesses with imports of key commodities such as wheat, fertiliser, rice and sugar.
The BII and Citi facility will help local businesses in underserved markets to finance the import of economically productive goods, transport, essential equipment and machinery supporting the emergence of manufacturing industries in frontier and emerging economies, including Benin, Cameroon, Côte d’Ivoire, Rwanda, Tanzania, Uganda and Zambia.
The funding comes as local businesses struggle to secure key imports due to challenges precipitated by the COVID-19 pandemic and the Russia-Ukraine war, which have led to high inflation, rising interest rates and an increase in commodity prices. As a result, the trade finance gap in Africa has increased by approximately a third since the onset of the pandemic, climbing from $81 billion in 2019 to $120 billion in 2023.
BII has supported businesses in Africa since 1948 and Citi opened its first office in the continent in 1920. The new facility leverages their combined expertise and will potentially deepen Citi’s relationships with over 200 local banks who in turn can empower ambitious companies facing severe funding constraints in harder-to-reach markets.
The UK’s Minister for Development and Africa Andrew Mitchell said: “This investment underlines BII’s commitment to supporting fragile economies across Africa in accessing vital goods to support food production, including fertiliser and agricultural machinery. By investing in countries where support is most needed, BII continues to take a lead in the fight against food insecurity.”
Nick O’Donohoe, CEO, British International Investment, said: “Our investment with Citi deepens BII’s footprint across the continent and supports local businesses struggling to maintain and expand operations due to a lack of capital. The facility is testament to our commitment to tackle complex issues such as food security in Africa by extending liquidity solutions to strategic sectors. This empowers local businesses to strengthen supply chains and accelerate the flow of essential trade.”
Stephanie von Friedeburg, Head of DFI Strategic Partnerships, Citi, said: “Citi is proud to work with BII in seeking to strengthen trade, and food security in frontier and emerging African economies. Today’s announcement brings together BII’s long history of support in the region, with Citi’s unique cross-border vantage point. At Citi, we understand the transformative potential of global trade and are committed to bringing solutions that facilitate critical investments to enable economic growth.”
This investment contributes to the United Nations’ Sustainable Development Goals 1, 2 and 8, No Poverty, Zero Hunger, and Decent Work & Economic Growth.
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