British International Investment (BII), the UK’s renowned development finance institution and impact investor, unveiled a groundbreaking $100 million risk-sharing facility in collaboration with Citi to bolster trade finance accessibility for SMEs and corporates in emerging African economies.
The initiative, announced during a signing ceremony at the World Bank’s Spring Meetings in Washington, aims to alleviate the financial constraints hindering businesses with significant potential.
The investment targets the pressing scarcity of foreign currency in the region by furnishing trade finance liquidity to Citi’s expansive network of commercial banks.
This strategic move enables financial institutions to better assist African businesses in importing vital commodities like wheat, fertilizer, rice, and sugar.
By facilitating the import of economically pivotal goods, transport, and essential machinery, the BII and Citi facility extends crucial support to local businesses in underserved markets.
These efforts bolster the emergence of manufacturing industries in frontier and emerging economies, including Benin, Cameroon, Côte d’Ivoire, Rwanda, Tanzania, Uganda, and Zambia.
The funding initiative comes amidst the challenges exacerbated by the COVID-19 pandemic and the Russia-Ukraine conflict, leading to soaring inflation, escalating interest rates, and surging commodity prices.
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Consequently, the trade finance gap in Africa has widened by approximately a third since 2019, climbing from $81 billion to $120 billion in 2023.
With a legacy of supporting African businesses dating back to 1948 for BII and Citi’s establishment of its first office on the continent in 1920, this new facility harnesses their combined expertise.
It promises to deepen Citi’s relationships with over 200 local banks, empowering ambitious companies grappling with severe funding constraints in challenging markets.
UK Minister for Development and Africa, Andrew Mitchell, affirmed the significance of BII’s investment in supporting fragile African economies, particularly in accessing vital goods for food production.
Nick O’Donohoe, CEO of British International Investment, highlighted the investment’s role in addressing food security by providing liquidity solutions to strategic sectors, empowering local businesses to fortify supply chains and expedite essential trade.
Stephanie von Friedeburg, Head of DFI Strategic Partnerships at Citi, underscored Citi’s commitment to enhancing trade and food security in frontier and emerging African economies.
The investment aligns with the United Nations’ Sustainable Development Goals, contributing to No Poverty, Zero Hunger, and Decent Work & Economic Growth.
(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)
