CDC Group has signed a 100 million US dollars risk participation agreement with Standard Chartered Bank, to help boost trade finance for businesses in Africa and South Asia.A joint statement issued in Dar es Salaam shows the agreement will help increase the availability of trade finance in developing countries, thereby boosting job creation and economic growth.
The agreement – which is expected to generate an estimated incremental trade volume in excess of 1.0 billion US dollars over the three year life of the transaction – will boost the level of trade finance in some of the poorest countries of Africa and South Asia.
Under the agreement, the two UK’s based institutions will bear the risks of local banks involved in supporting trade flows of Standard Chartered’s clients.
“The local banks will be able to pass on the benefits of the facility by offering trade finance to their clients who rely on trade for growth and job creation,” the statement reads in part.
The global financial crisis sharply reduced the availability of trade finance in developing economies and CDC and Standard Chartered have been working to promote trade finance arrangements that maintain and expand financing lines, such as letters of credit and bank guarantees.
“Growing businesses in Africa and South Asia continue to find it difficult to get the finance they need from local banks to help them reach international markets.
“Our arrangement with Standard Chartered will help boost trade finance which is fundamental to economic development,” the CDC’s Chief Executive, Diana Noble is quoted in the statement.
This is the first time that CDC has undertaken a bilateral risk-sharing deal and in doing so the institution would be able to target precisely its support to countries in Africa and South Asia that most need it.
“This is a new way for CDC to get its capital to work and with Standard Chartered we have a partner with an excellent network and understanding of our markets. By working together we can support exporters and importers in poorer countries,” she is further quoted.
Standard Chartered Global Head of Sales, Transaction Banking, Jiten Arora said they were delighted to be partnering with the CDC for its first bilateral risk-sharing programme.
“We are committed to encouraging global trade – the lifeblood of the world economy – and are pleased to be building on our successful track record of supporting the growth of trade flows through risk sharing programmes,” he said.
Source: The Daily News, reported from Dar es Salaam
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