IFC, a member of the World Bank Group, has entered into a loan agreement with Malta-based FimBank to help ensure that its client companies in the Middle East and Africa can import the production materials and machinery they need to grow their businesses.
The $60 million loan agreement will help FimBank to finance trade transactions for emerging market firms in consumer goods, small machinery, raw materials and components. It comes at a time when global volumes of trade finance are decreasing and their costs increasing, due mostly to growing liquidity pressures and perceived risks in developing countries.
“These funds will be used to support trade in emerging market countries and help contribute to growth in major sectors of their economies,” said FimBank president Margrith Lutschg-Emmenegger. “We appreciate the backing of partners such as IFC, whose ongoing support signals an important vote of confidence in the FimBank Group and its activities.”
Through this loan agreement, IFC plans to help finance at least 60 trade transactions, of which 20 are expected to be in the poorest countries in the region.
“This trade finance deal represents an excellent opportunity for IFC to help businesses in Africa and the Middle East make the import and export transactions necessary to grow their operations,” said Aftab Ahmed, IFC director of financial markets in Europe, Central Asia, Middle East and North Africa. “At a time of market uncertainty, we are pleased to be able to help FimBank help the firms that drive growth in the Middle East and Africa.”
The loan agreement consists of a $15 million IFC senior loan, with a further $45 million from the Saudi Fund for Development, to be administered through an IFC trust fund.
The principal objectives of the Saudi Fund for Development are to participate in financing of projects in developing countries in order to increase economic and social development and raise the standard of living of citizens within these least developed, low income countries.
IFC has been a shareholder in FimBank, an international trade finance bank focused on delivering trade finance solutions to businesses worldwide, since 2005, and is also a joint-venture partner in FimBank’s FactorRus and Egypt Factors joint-venture funds.