Standard Chartered and Africa Finance Corporation (AFC), a multilateral development financial institution, have launched a funded risk participation programme to increase the availability of trade finance in Africa.
The programme, a first between the two institutions, is expected to generate an estimated incremental trade volume in excess of $350 million over the three-year life of the transaction.
According to information available to business a.m, the financing is open and can be drawn down at any time.
The portfolio-based risk-sharing facility will see Standard Chartered and AFC “take up to a 50:50 basis on the underlying portfolio of the trade finance instruments through African issuing banks”, Standard Chartered says.
The programme’s beneficiaries are from over 25 countries and 100 issuing banks across the continent and are subject to certain underlying transactional criteria.
One of the conditions is that either leg of the transaction – the imports or exports – has to be in Africa.
According to Andrew Alli, AFC’s president and CEO, the programme will stimulate further work between the two institutions.
“In the wake of the global financial crisis, access to trade financing reduced significantly across emerging market, particularly in Africa. This was as a result of changing regulatory landscapes, as well as a general reduction in credit risk outlook,” he said.
“Our arrangement with Standard Chartered will help boost trade finance activities within the region. We will also be taking this relationship forward by working together on various other initiatives across corporate and regional trade. By working together, we can support the real trade economy in this very emerging vibrant continent.”
Commenting on the launch of the programme, Lisa Robins, global head, Transaction Banking, Standard Chartered, said: “Africa is core to our unique and expansive network. We are honoured to partner with AFC to support the region’s economic and developmental needs.
This programme is a testament to our commitment to enable economic growth through global trade and commerce.”
Leke Ogunlewe, country head of Global Banking, Nigeria, Standard Chartered said: “We are delighted to be working with AFC on this initiative and partnerships like these promote trade to support our clients’ flows in and through Africa.”