The agreement – which is expected to generate an estimated incremental trade volume in excess of $1bn 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, CDC said.
Under the agreement, the two 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 global financial crisis sharply reduced the availability of trade finance in developing economies said Diana Noble, CDC’s chief executive. “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.”
She added, “This is the first time that CDC has undertaken a bilateral risk-sharing deal and in doing so we’ve been able to target precisely our 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.”
From 2004 to 2011 CDC operated primarily as a fund of funds investor, investing in companies through intermediary fund managers. In 2012 it announced a new strategic plan, with a geographic remit focused on sub-Saharan Africa and South Asia. As well as acting as a fund-of-funds investor, CDC will now also provide debt and direct investment to businesses in these regions.
Copyright © 2013 AltAssets