The International Finance Corporation (IFC) and DBS Bank have unveiled a US$500 million financial initiative aimed at enhancing trade in emerging markets.
This collaborative effort is part of IFC’s Global Trade Liquidity Programme (GTLP) and seeks to increase capital and trade flows across Asia, Africa, the Middle East, and Latin America.
The initiative is a strategic response to the US$2.5 trillion global trade finance gap, targeting economic acceleration in these pivotal regions.
Under this partnership, IFC and DBS will equally share the risk on a portfolio of trade-related assets worth up to US$500 million.
This arrangement is expected to boost DBS’s ability to provide more efficient trade financing solutions, such as Letters of Credit, to businesses interacting with counterparts in emerging markets, thereby facilitating quicker transactions and better risk management.
Recognizing the essential role of emerging markets in achieving a low-carbon future, 20% of the facility’s resources are allocated to climate-friendly trade transactions. This includes trading in renewable energy and energy-efficient equipment, as well as commodities certified for climate-smart agriculture.
The facility marks a significant milestone as the first GTLP collaboration between IFC and a Southeast Asian bank, as well as their first long-term investment project together.
It addresses the urgent need for trade financing in emerging markets, which has been exacerbated by economic uncertainties in recent years.
The initiative particularly aims to assist small and medium-sized enterprises (SMEs) by enabling them to participate more fully in global commerce.
This financing initiative also acts as the first under a Memorandum of Understanding signed in 2023 between IFC and Enterprise Singapore (EnterpriseSG), designed to catalyse financing for Singaporean enterprises in emerging markets.
To date, the GTLP has supported more than 400 financial institutions in 69 emerging market countries, contributing to over US$53 billion in global trade volume.
Sriram Muthukrishnan
“As our trade finance exposure to emerging markets continues to grow at pace, we constantly seek innovative ways to support our clients’ evolving requirements.
These include a greater focus on strengthening supply chain resilience, diversifying business models, establishing new markets, and capitalising on the significant increase in emerging markets trading and infrastructure activities.”
said Sriram Muthukrishnan, Group Head of Global Transaction Services Product Management at DBS Bank.
Nathalie Louat
“In today’s interconnected world, the importance of supply chains cannot be overstated, as they are the foundation upon which successful businesses and thriving economies are built.
We believe that IFC’s partnership with DBS will unlock opportunities for more businesses to reach new markets and expand their operations, fostering economic growth.”
said Nathalie Louat, Director of Trade and Supply Chain Finance at IFC.
Featured image: Sriram Muthukrishnan, Group Head of Global Transaction Services Product Management at DBS, signs the USD 500 million facility with Nathalie Louat, Director of Trade and Supply Chain Finance at IFC. Observing the signing ceremony are (back row from left to right): Simon Ong, Global Head of Financial Institutions Group at DBS, Gina Lim, Director, Financing Ecosystem at Enterprise Singapore and Arnaud Dupoizat, Manager, Financial Institutions Group at IFC East Asia Pacific.
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- Source: https://fintechnews.sg/94030/blockchaintradefinance/ifc-dbs-address-trade-finance-gap-with-us500-million-programme/
