ADB expands into Pacific Islands
The Asian Development Bank (ADB) has expanded its trade finance programme (TFP) into the Pacific Islands for the first time, with the inclusion of two Samoan banks.
The National Bank of Samoa and Samoa Commercial Bank entered into loans and guarantee agreements through the TFP, whereby the ADB will provide US$12mn each year for the local banks to on-lend in the form of trade finance to companies on the island.
The ADB says that it hopes the TFP will allow Pacific traders hampered by high costs and difficult geographic conditions to improve business by gaining access to affordable trade finance.
In an ADB survey, it was found that access to finance was the greatest barrier to doing business for exporters on the Pacific Islands. There are few guarantee programmes, and the ADB hopes to continue with this initial induction by working with 18 other regional banks that participated in a workshop in Fiji late last year.
Edward Faber, ADB TFP manager for the Pacific, says: “Currently many Samoan importers pay for goods upfront, which can mean strained cashflows and a risk of not receiving goods.”
He adds: “Under the TFP, the ADB will work with the local banks to increase the use of financial products such as letters of credit, which will enable importers to pay safely, while the ADB will also look at ways to support exporters through products like loans for pre-export finance.”take me back