MOZAMBIQUE – Nedbank Mozambique S.A., has joined International Finance Corporation’s (IFC) Global Trade Finance Program (GTFP) to boost a vital economic engine of growth that has been strained by the COVID-19 pandemic.
IFC announced a trade finance facility guarantee of US$10 million under its GTFP to Nedbank Mozambique which will provide support to strengthen the bank’s trade finance operations and assist in redesigning its trade solutions to promote Mozambique’s cross-border trade.
IFC has already started to provide Nedbank Mozambique with technical expertise under the GTFP through a workshop that took place in June 2021 focused on helping the bank to strengthen its trade framework and enhancing trade risk management.
“Nedbank Mozambique is privileged and proud to achieve this milestone, of formalizing a partnership with IFC and benefiting from the technical support for the bank’s Trade Finance Strategy. This will definitely create many opportunities and improve the capability of creating tailor-made solutions for our customers. It is a pleasure to launch the partnership right after the bank underwent a brand change and became Nedbank Mozambique, as this will have a strong impact in the market as well,” said Joel Rodrigues, CEO of Nedbank Mozambique.
IFC’s GTFP provides risk mitigation under a US$5.5 billion envelope by guaranteeing trade-related payment obligations of banks in developing economies.
Since its inception in 2005, the program has issued more than 71,000 guarantees for trade finance transactions to support the growth of various sectors including infrastructure, agriculture, and health care.
IFC’s Trade and Supply Chain has supported more than US$190 billion in trade in more than 90 countries.
“As Mozambique recovers and rebuilds from the ongoing impact of COVID-19, it’s vital to support key areas such as trade. Trade is a key driver of economic growth, contributes to job creation, and helps improve access to essential goods, especially for the country’s many small businesses,” said Hector Gomez Ang, IFC’s Country Manager for Mozambique.
The guarantees are transaction-specific and can be supported by a variety of underlying instruments such as letters of credit, trade-related promissory notes, accepted drafts, bills of exchange, guarantees, bid and performance bonds, and advance-payment guarantees.
The guarantees are available for all private-sector trade transactions that meet IFC’s eligibility criteria.
In the fiscal year 2020, IFC invested US$22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity.
The Global Trade Finance Program (GTFP) extends and complements the capacity of banks to deliver trade financing by providing risk mitigation in new or challenging markets where trade lines may be constrained.
Under GTFP, IFC has issued guarantees covering over 68,000 transactions to date for more than US$66.5 billion.
Through the GTFP bank network, local financial institutions can establish working partnerships with a vast number of major international banks in the Program that can broaden access to finance and reduce cash collateral requirements enabling a continued flow of trade credit into the market at a time when imports may be critical and the country’s exports can generate much-needed foreign exchange.
Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy and more. SUBSCRIBE HERE