Trade is the lifeblood of the world economy and a key driver of global integration, helping small and medium enterprises (SMEs) to grow and create jobs. Trade finance is the engine of an estimated $14 trillion in annual global commerce and is fundamental to the movement of goods at all stages of the supply chain, especially in emerging markets.
Trade finance is a priority for IFC because we have seen the high development impact it can have on developing countries. Through the Global Trade Finance Program (GTFP) launched in 2005, IFC issues credit guarantees where others won't, providing essential liquidity for trade flows through its global network of more than 500 bank partners, helping SMEs in the world's poorest countries join the global trading system.
Since its inception, GTFP has covered over 25,000 trade transactions and supported over $27 billion in emerging market trade, without a single loss. In IDA countries, GTFP has committed over $11 billion, with commitments of $5.4 billion in Sub-Saharan Africa.
GTFP has provided IFC a gateway to engage in otherwise challenging markets; it has supported trade in 27 of the 35 current fragile and conflict-affected situations (FCS), committing investments in 19 of these areas in FY12.
IFC is playing a leadership role in supporting and protecting global trade flows to the world’s poorest countries at a time when many banks are pulling out of trade finance. IFC is delivering a coordinated set of programs that support global trade by helping stabilize and foster trade and commodity finance. In particular, IFC focuses on supporting trade in areas such as agribusiness, SMEs, and energy, because these have the greatest impact on the poor.
In 2008, the Global Trade Liquidity Program (GTLP) was conceived to channel liquidity quickly to targeted markets by providing trade credit lines and refinancing portfolios of trade assets held by selected banks. These two award-winning programs have since facilitated $50 billion in trade to and from emerging markets.
In late 2010, capitalizing on the success of the GTFP and GTLP, IFC formed its Trade and Supply Chain Department, which integrates supply chain financing and other trade facilitation initiatives with its two existing trade finance programs. Our suite of innovations to address gaps in the availability of working capital in emerging markets has expanded to include the Global Warehouse Finance Program (GWFP), the Global Trade Supplier Finance (GTSF) program, distributor finance, structured trade finance, systemic liquidity solutions, and the Critical Commodities Finance Program (CCFP).