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With a contribution of about US$1mn, Japan has become the first donor country to provide financial support to the International Finance Corporation’s Global Trade Finance Program.

 

IFC, the private sector arm of the World Bank Group, launched the Global Trade Finance Program in October 2005 to promote trade flows between emerging markets. In 2006, IFC complemented the programme with a technical assistance and training initiative for local banks to help build capacity in trade finance operations, reduce transaction costs, and link to a leading network of correspondent bank partners.

 

“IFC welcomes Japan’s support for the Global Trade Finance Program,” says Jyrki Koskelo, director of IFC’s global financial markets department. “Technical assistance and training of local banks will be an integral part of the programme. This will assist banks in emerging markets as they develop and scale up their trade finance operations. We expect the demand for our programme to grow over the next two years, and we appreciate donor countries “further support of our efforts.”

 

In its first 14 months of operations, the Global Trade Finance Program has facilitated 592 transactions with a total value of about US$559mn, 75% of them in frontier countries. Over 79% of the transactions have benefited small and mid-sized importers and exporters in developing countries.

 

Laurence Carter, director of IFC’s small and medium enterprise department, says, “The support of the government of Japan, and Japanese companies and banks, is crucial in helping IFC develop the private sector in emerging markets. This project is a perfect example of how IFC can use support from donor governments to develop local banks and promote trade.”

 

Makoto Hosomi, World Bank Group executive director for Japan, comments, “The Global Trade Finance Program supports more than 700 exporters and importers worldwide, including Japanese industries that are doing trade businesses with emerging markets. I am convinced that Japan’s contribution is appreciated not only by frontier markets but also by the Japanese private sector.”

 

The World Bank Group views trade as a vital way to promote development and reduce poverty. Countries that have strengthened their links to the international economy through trade and investment have grown more rapidly. The Global Trade Finance Program enables frontier countries to access the market and support the growth of small and medium enterprises.