Standard Chartered and UK development institution CDC have come together on another risk participation agreement – this time to support businesses in Sierra Leone.
The new agreement will support new working capital lending of up to US$50mn to companies in the country.
According to a statement issued by the bank, economic growth in Sierra Leone is slowing as a result of the Ebola crisis, with GDP growth, which was expected to be 11.3% in 2014, revised downwards to 4%. “The revised estimates come on the back of shortages in the supply of basic essential commodities and disruptions to supply chains, as well as reduced production from the mining sector,” reads the statement.
This agreement by CDC allows Standard Chartered to increase the number of loans it makes in the West African country. The one-year deal will see CDC and Standard Chartered share the default risk on up to US$50mn of new loans originated by the bank in Sierra Leone.
By providing short-term finance to the businesses, the facility will support them to continue to operate despite slower economic growth and supply chain disruption.
Many of the companies that are expected to benefit from this facility are involved in the import and distribution of key food staples such as rice, flour, cooking oil and sugar, as well as non-food items such as building materials, hygiene products and petroleum products, which are critical to Ebola relief efforts.
In May 2013 Standard Chartered and CDC signed a US$100mn risk participation arrangement: CDC’s first bilateral risk-sharing transaction. The deal was signed to offer importers and exporters in 19 South Asian and African countries greater opportunity to access finance for their trade in goods and services.