IFC Expands Trade Finance Assistance in the Region

Through our Global Trade Finance Program, IFC has increased its assistance to conflict- affected and least developed countries in the Middle East and North Africa (MENA) to help businesses, especially small businesses, expand by facilitating their access to trade finance. IFC provided $490.6 million in trade finance guarantees in the MENA region, more than double than the year before, and issued 447 guarantees, which is three times the number issued in fiscal year 2008. The program has also increased its presence in the region, adding six new banks in fiscal year 2009 for a total of 23 active banks in seven regional countries.

Increasing cross-border trade helps local companies build markets, create jobs, and raise incomes. The program now has partner banks in four out of the five conflict-affected or least developed countries in the region – including Afghanistan, Pakistan, West Bank and Gaza, and Yemen – assisting these countries in expanding job opportunities and encouraging a better doing business environment. Also, IFC continued its commitment to helping small and medium businesses access finance, with 70 percent of trade finance commitments in fiscal year 2009 going towards small and medium enterprise projects, and 74 percent of guarantees being for less than $500,000.

More than 1,800 guarantees have been issued for $2.4 billion globally, and in MENA 447 guarantees have been issued for $490.6 million, representing 21 percent of global commitments managed under GTFP.

Recently Afghanistan International Bank became the first bank in Afghanistan to join IFC’s Global Trade Finance Program as an issuing bank, allowing the bank to expand access to trade finance within an extensive network of countries and banks.

In Pakistan, IFC stepped up and supported our clients by initiating new partnerships and enhancing trade facilities for existing partners. IFC provided $258 million in trade finance in fiscal year 2009 versus $67 million in the previous fiscal year.

IFC’s Global Trade Finance Program facilitates trade by providing guarantees to support both import and pre-export finance that covers payment risks in trade transactions with local banks in emerging markets, primarily for small and medium enterprises. As more banks participate, the program allows IFC to support international trade between more and more developing countries, and for an even greater variety of manufactured goods and commodities.

As a result, issuing banks are able to increase the volume and value of trade transactions, with enhanced tenors and access to competitive pricing terms. In MENA, it has helped local banks support new trade in:

· Afghanistan ($100,000)
· Jordan ($65 million)
· Lebanon ($404 million )
· Pakistan ($335.4 million)
· Yemen ($7.17 million)
· West Bank and Gaza ($3.76 million)

IFC Global Trade Finance Program also provides training and advisory services to its clients. In fiscal year 2009 in MENA, IFC held trade finance training programs in Jordan, Pakistan, and West Bank and Gaza, training 56 people.