Rabat, Morocco, September 1, 2021—IFC and BMCE Bank International Plc UK announced today a partnership designed to support cross-border trade in Africa and prevent shortages of essential goods—including grains and building materials —amid the COVID-19 crisis.
IFC will enter into a risk-sharing facility with BMCE Bank International Plc UK, a leading regional lender, allowing the bank to scale up the financing it provides to importers and exporters. That capital, known as trade financing, is considered the backbone of the international trading system. The risk-sharing facility will cover 50 percent of losses on all eligible loans made by BMCE Bank International Plc UK, for a total portfolio of $150 million.
The agreement comes as the COVID-19 pandemic has plunged Africa into its first recession in 25 years and stymied cross-border trade, with imports falling by an estimated 16 percent in 2020, according to the World Trade Organization. Slowing trade can have far-reaching effects because few, if any, countries produce all the goods and services their populations require. Supporting trade in Africa is considered especially crucial. Ten of the top 20 rice-importing countries globally are located in Sub-Saharan Africa.
Houssam El Hak Morssi Barakat, CEO of BMCE International Plc UK said, "We are very delighted to close this agreement with IFC. Origination and distribution are key to our business model, and thanks to privileged partners like IFC we will be serving our international and African customers by bridging the trade finance gap between Europe and Africa with a sustainable finance impact."
IFC will provide up to $75 million to the risk-sharing facility under its Global Trade Liquidity Program, to serve financial institutions active in 20 African countries, including six fragile or conflict-affected states. IFC's support to BMCE Bank International Plc UK is underpinned by the International Development Association's Private Sector Window Blended Finance Facility, which provides first-loss guarantees in low-income countries.
"The COVID-19 crisis has made the export and import of goods more challenging, but goods still need to move across borders to support businesses, feed households, and sustain livelihoods," said Manuel Reyes-Retana, IFC's Regional Industry Director for the Financial Institutions Group in Africa. "Our risk-sharing facility with BMCE Bank International will support trading in these trying times and help ensure that Africans continue to have access to essential goods and services."
BMCE Bank International Plc UK is a leading regional bank offering a wide range of trade finance solutions to support exporters and importers with a focus on Africa. The bank is a subsidiary of Bank of Africa in Morocco and operates in 18 countries in Sub-Saharan Africa.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
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About the IDA Private Sector Window
As part of the record $75 billion IDA18 replenishment, the World Bank Group created the $2.5 billion IDA Private Sector Window to catalyze private sector investment in the poorest and most fragile countries. Recognizing the key role of the private sector in achieving IDA18 objectives and the Sustainable Development Goals, the window provides concessional funds for co-investment alongside IFC and Multilateral Investment Guarantee Agency private investments. Concessional funds help to mitigate risk and reduce barriers, which unlocks and crowds in private investment in emerging markets. For more information, click here.
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