IFC and MIGA Launch Trade Finance Guarantee Initiative
WASHINGTON DC, July 8, 2021 — IFC and MIGA, members of the World Bank Group, today launched a joint initiative that will support trade flows of critical goods, including food and medical equipment, in low-income and fragile countries to help them recover from the impacts of the COVID-19 pandemic.
The global pandemic pushed the world into its deepest economic downturn, and today, more countries are in a recession than at any other time in the last 150 years. This crisis continues to hit the most vulnerable people the hardest. Through this initiative, IFC and MIGA will support small and medium-sized enterprise (SME) exporters and importers with trade transactions intermediated by state-owned bank partners, that will ultimately benefit the private sector.
The initiative will be launched under IFC’s Global Trade Finance Program (GTFP), alongside which MIGA will provide a guarantee. IFC established the GTFP in 2004, and since then has issued over $72 billion guarantees in emerging markets that support close to 150,000 exporters and importers. The countries that this new initiative will consider include some fragile countries in Sub-Saharan Africa.
“Helping underserved SME value chains, especially in Sub-Saharan Africa, through new channels is of great interest to IFC. This joint initiative will originate trade flows that we have not been able to capture to date,” said Makiko Toyoda, GTFP Program Lead. “This initiative will enable IFC to enter into new markets where support is most needed.”
Muhamet Fall, Director for Infrastructure, MAS, and Trade at MIGA, said “The new trade finance initiative is further demonstration of MIGA’s commitment to supporting countries adversely affected by the COVID-19 pandemic. This partnership with IFC will expand our collective trade finance capacity to provide much-needed support to the supply chain for medicine and medical equipment, including vaccines and small and medium trading businesses and enterprises.”
IFC and MIGA are committed to supporting the revitalization of global value chains and expect to originate $1 billion in trade finance guarantees in three years for low-income and fragile economies that are weathering or recovering from the fallout of the pandemic. IFC has been active in providing trade finance advisory services and intends to include new partner banks through this initiative in its training programs.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued over $59 billion in guarantees across 118 developing countries.
Elena Gex Renjel
Vamsee Krishna Kanchi
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