Trade Finance Guarantee Facility

Project Description  

This summary covers an application by Standard Chartered Bank plc for coverage of a proposed short-term loan facility, focused on supporting trade, to JSC Business Development Bank. The Multilateral Investment Guarantee Agency (MIGA) would provide the lender with up to US$55.0 million in trade finance guarantees against the risk of non-payment by JSC Business Development Bank.   

The MIGA-covered facility would be used to provide short-term loans for trade-related payments, aimed mainly at supporting the manufacturing, agriculture, services, trade, and transportation sectors. The tenor of each loan to be made under the facility is up to one year.  

Environmental Categorization   

The MIGA-covered facility will be used by BDB to on-lend to their SME clients for trade-related activities. These transactions pose minimal environmental and social (E&S) risks and impacts and as such, the overall portfolio risk is considered low. The guaranteed transaction has thus been categorized as ‘FI-3’ under MIGA’s Policy on Environmental and Social Sustainability (2013).  

The applicable E&S requirements for this Guaranteed Transaction are the MIGA Exclusion List, applicable E&S laws in Uzbekistan, and additional considerations for agri-commodities cotton sector screening as applicable. BDB will be responsible for screening the transactions against the MIGA E&S requirements, BDB will also be required to comply with the labor standards set forth in MIGA Performance Standard 2: Labor and Working Conditions.   

Development Impact  

The Guaranteed Transaction is expected to contribute to the Government of Uzbekistan’s strategic priority of supporting the growth and development of Micro, Small, and Medium-sized Enterprises (MSMEs) by increasing their access to trade finance and to demonstrate the financial viability of trade finance lending, in particular to MSMEs, which could encourage other banks (state-owned or private) to increase its availability of credit on the trade finance space. 

The Guaranteed Transaction is aligned with the priorities set under the MIGA’s FY24-26 Strategy and Business Outlook, as it will support the expansion of trade finance, as well as with MIGA’s focus of supporting IDA countries. In addition, the Guaranteed Transaction is consistent with MIGA’s strategic focus of ensuring inclusive growth as it is expected to support underserved groups such as MSMEs.