The International Finance Corporation (IFC), the private sector arm of the World Bank Group, and Citigroup have signed a US$70mn trade enhancement facility designed to provide financing for private sector importers of capital goods and raw materials in Jordan and Lebanon.
The facility includes four banks: Cairo Amman Bank and Export and Finance Bank in Jordan and Bank of Beirut and the Arab Countries and Banque Libano-Franaise in Lebanon. Additional banks may be added at a later point in time. Citibank’s branches in Jordan and Lebanon also benefit from the facility. IFC is guaranteeing 50% of each transaction in all cases.
Karl Voltaire, the IFC’s director for global financial markets, says: “This facility enhances the availability of trade finance to importers in the Middle East region by helping supplement country limits currently available to commercial banks operating in Jordan and Lebanon . It will help maintain the level of trade finance flows to the private sector in Jordan and Lebanon at a time when such finance is needed.”
Sami Haddad, IFC’s director for the Middle East and North Africa, adds that “given the various adverse external shocks, it is particularly important to maintain trade flows since they contribute significantly to the level of economic activity in Jordan and Lebanon . IFC is also considering participating in other projects that help strengthen the economies of Jordan and Lebanon and restore investor confidence.”
Shehzad Naqvi, Middle East regional manager of Citigroup, notes: “This new facility enables us to multiply and enhance our correspondent banking business in Jordan and Lebanon, enabling us to deliver better services for our international clients, as well as providing additional facilities to these banks in Jordan and Lebanon. This is a tremendous development for these countries and it’s our intention to replicate this approach across the region.”
This investment fits well within IFC’s strategy and the overall World Bank Group strategy for Jordan and Lebanon as it will help further develop the financial sector, increase overall trade, and support private sector businesses by enabling local commercial banks to extend longer tenor trade credit.
Furthermore, the facility is a natural extension of Citigroup’s activities in Global Transaction Services in general and trade finance in particular, claims the bank.