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To assist in providing essential financing for importers and exporters of crucial goods in Africa, particularly in smaller, fragile, and conflict-affected states, IFC has established a risk-sharing facility with Deutsche Bank worth up to €215 million.
In 2022, African nations imported and exported goods and services worth $1.1 trillion, representing 54% of the continent’s GDP. Despite this, banks in Africa face cashflow challenges that hinder their ability to satisfy the demand for trade finance, as indicated by IFC annual bank surveys and a joint IFC-WTO study of West Africa.
This partnership with Deutsche Bank aims to address these challenges, allowing Deutsche Bank to sustain its provision of trade finance to African countries during a period when many global banks are reducing their involvement—thereby supporting continuous trade activities across the continent.
Enhanced trade within Africa and other regions could aid in climate adaptation and fortify food security by improving the supply and affordability of food, as noted by the IMF.
Through this facility, IFC will participate in risks associated with a portfolio of trade transactions initiated by Deutsche Bank alongside local issuing banks in Africa.
The initial portfolio will mitigate risks for 40 issuing banks in 18 African countries, 14 of which are identified by the International Development Agency (IDA) as small, fragile and/or conflict-affected.
“IFC’s risk participation with Deutsche Bank leverages our issuing bank network to enable trade flows in Africa with our Global Hausbank clients and echoes a shared commitment to ongoing economic growth in emerging markets,” stated Borislav Ivanov-Blankenburg, Global Head of Documentary Trade Finance for Deutsche Bank.
“IFC’s partnership with Deutsche Bank comes at a time when traders in Africa are finding it increasingly difficult to access credit, with demand for trade finance from banks on the continent greatly outstripping supply,” mentioned Mohamed Gouled, IFC Vice President for Industries. “This risk-sharing facility will help African importers and exporters participate in global value chains, creating jobs and driving economic growth.”
IFC expects this initiative to inspire other financial institutions to offer trade finance to credit-issuing banks in Africa, leading to expanded support for trade in essential goods across the continent. This project marks the first Global Trade Liquidity Program (GTLP) facility under the IFC Africa Trade and Supply Chain Recovery Initiative (ATRI) supported by the IDA Private Sector Window (PSW) Blended Finance Facility, aimed at increasing credit availability to emerging market issuing banks in Africa.
