British International Investment and Ghana International Bank have formed a $50 million partnership to improve trade finance in West Africa. This initiative will enhance foreign exchange liquidity for essential goods, supporting local businesses in various countries. The program addresses existing financing challenges faced by the region’s SMEs, contributing to sustainable economic growth.
The British International Investment (BII) and Ghana International Bank (GHIB) have announced a significant partnership, amounting to $50 million, aimed at enhancing trade finance in West Africa. This initiative seeks to improve foreign exchange liquidity, which is essential for the import of critical goods. Targeted countries for this collaboration include Sierra Leone, Liberia, The Gambia, Benin, DRC, Rwanda, and Tanzania.
The funding provided through this trade facility will empower GHIB to assist local businesses in importing necessary commodities and equipment. This financial support is expected to remedy the reluctance of traditional lenders to finance frontier markets in Africa, which are often perceived as high-risk environments.
Dean Adansi, CEO of GHIB, remarked on the partnership, stating, “We will work to make this deal a success, as it will open the way for more liquidity injections into the market.” He emphasized that the trade facility is an important step towards enhancing the financial landscape.
The African Development Bank (AfDB) estimates Africa’s annual trade finance deficit to be approximately $81.8 billion, highlighting the chronic financing challenges faced by small and medium-sized enterprises in the region. In a recent report, the AfDB noted that these businesses are significantly disadvantaged due to limited access to necessary financing.
Moreover, Adansi noted that previous research conducted by GHIB indicates that each dollar of trade generates about $1.30 in economic value within the West African markets. Kwabena Asante-Poku, BII’s country director for Ghana, stated, “Trade remains a key driver of growth for African economies, especially in frontier markets like Sierra Leone, Liberia and The Gambia. Enhancing the flow of trade credit […] will ensure access to essential goods and services.”
Ray Collins, the UK Minister for Africa, commented on the significance of the initiative, labeling the trade financing gap as “one of the continent’s most pressing challenges.” He highlighted that this funding will facilitate local businesses in engaging more effectively in global trade, including trade relations with the UK.
In summary, the $50 million partnership between BII and GHIB aims to address the critical trade finance gap in West Africa by boosting liquidity and supporting local businesses. This initiative is expected to enhance access to essential goods and drive sustainable economic growth in several targeted countries. The collaboration highlights the pressing need for increased trade financing to support small and medium-sized enterprises in the region.
Original Source: impact-investor.com
