Trade finance to Africa and South Asia reaches record high at impact investor CDC Group
CDC Group, an impact investor and development finance institution based in UK, has heralded a “record month” for its trade guarantee programme, with over USD500 million guaranteed across 350 transactions in March, representing a new programme high.
This is in addition to a USD100 million trade loan facility made available to one of Africa’s leading banks.
Since launching the Trade Finance programme in 2015, CDC has guaranteed USD3.3 billion, resulting in USD12.5 billion of trade across its markets of Africa and South Asia. CDC currently provides limits to over 350 local banks across Africa and South Asia. Through these banks CDC helps to strengthen financial markets, thousands of businesses are supported with vital capital for growth and it underpins the importation of essential commodities to provide access for millions of local people across our markets.
The gap in trade finance is one of the key constraints facing local exporters and importers – estimates show that this stands between USD90 billion to USD120 billion in Africa – with businesses’ growth often limited by the challenge of accessing much needed finance.
Recognising that its trade finance programme is critical to job creation and economic growth, CDC has accelerated its programme to help plug these gaps and drive an increase in trade, to benefit businesses, local communities and their people. By stimulating trade between businesses, CDC aims to help alleviate poverty, and ensure vital goods get to those that need them most across markets.
Trade finance is a key pillar in CDC’s response to Covid-19 and it is prioritising trade flows that support the global fight against this pandemic. The firm aims to strengthen markets by injecting systemic liquidity across its existing network of banks and financial intermediaries. CDC is also bolstering current banking partnerships to enable them to reach even more businesses, as many banks consider reducing trade finance availability across its markets.
The Coronavirus pandemic poses serious food security challenges in our markets. To help distribute vital food supplies to millions of people, CDC recently supported over USD165 million of trade flows in the food and agricultural sector, including: USD95 million in Bangladesh, USD56 million in Nigeria, USD14 million in Pakistan and USD2.4 million of trade flows in Nepal. This capital commitment will bring products such as maize, milk and wheat to thousands of people that need nourishment.
CDC is a champion of the Sustainable Development Goals. Its trade finance programme facilitates the import of essential food supplies and is working towards food security in Africa (SDG 2); it supports an increase in trade flows into and out of Africa (SDG 8); creates innovative financing solutions to support countries in most need of additional trade finance capacity (SDG 9); and mobilises additional financial resources for developing countries (SDG 17).
CDC’s director of trade and supply chain finance, Admir Imami says: “We continue to see a strong uplift in our Trade Finance programme. In March, we guaranteed over half a billion dollars to banks bolstering trade across Africa and Asia. As a DFI, we channel our capital to the most challenged markets, where trade finance is key to economic and social development.
“Covid-19 is destabilising every market and every part of the value chain. We have ramped up our Trade Finance programme as part of our pandemic response. Our current priority is to dedicate our trade finance programmes toward ensuring food security, medical and essential supplies and enhancing financial capacity in our market.”
CDC invests solely for the benefit of Africa and South Asia. As part of this in March, CDC has supported USD27 million of UK Export to counties like Bangladesh and Nigeria. Of the total 11 trades, four trades included shipment of milk powder to Bangladesh.