British International Investment and Ghana International Bank have formed a $50 million partnership to enhance trade finance in West Africa, focusing on improving foreign exchange liquidity crucial for imports. The initiative aims to support local businesses and address traditional lenders’ hesitance to provide credit in these markets, ultimately driving sustainable economic growth.
British International Investment (BII) and Ghana International Bank (GHIB) have announced a $50 million partnership aimed at enhancing trade finance in West Africa. This collaboration focuses on increasing foreign exchange liquidity to facilitate the importation of essential goods and services for businesses in countries like Sierra Leone, Liberia, and The Gambia. The initiative aims to support local businesses with necessary imports as well as exports, addressing a critical need in the region.
The $50 million facility will empower GHIB to provide funding for commodities and equipment, thereby helping local businesses sustain and expand operations. This agreement is particularly significant given the reluctance of traditional lenders to extend credit to frontier markets in Africa due to perceived risks and lower transaction volumes. As stated by Dean Adansi, CEO of GHIB, “We will work to make this deal a success, as it will open the way for more liquidity injections into the market.”
According to the African Development Bank (AfDB), Africa suffers from an annual trade finance deficit of approximately $81.8 billion. Small and medium-sized enterprises, which form the backbone of the continent’s economies, are especially disadvantaged by this lack of access to finance. GHIB’s findings indicate that each dollar of trade generates about $1.30 in economic activity within its operational regions in West Africa.
Kwabena Asante-Poku, BII’s country director for Ghana, emphasized that trade is a key growth driver for African economies, particularly in frontier markets. He stated, “Enhancing the flow of trade credit and financial intermediation to these markets will ensure access to essential goods and services, which in turn drives sustainable and inclusive economic growth.” Furthermore, UK minister for Africa Ray Collins recognized the significance of addressing the trade financing gap, labeling it as a pressing challenge for the continent. He noted that improved access to funding will enable local businesses to increase their trade activities with global markets, including the UK.
The $50 million partnership between BII and GHIB represents a proactive approach to bridging the trade finance gap in West Africa. By focusing on liquidity and supporting local businesses, the initiative is expected to catalyze economic growth in frontier markets. Addressing the substantial annual deficit in trade finance will enhance trade flows, thereby ensuring the availability of essential goods and services which are vital for economic sustainability.
Original Source: impact-investor.com
