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BII, Citi to support African SMEs with $100m

BII, Citi to support African SMEs with $100m

The United Kingdom’s development finance institution and impact investor, British International Investment, has announced the signing of a $100m risk-sharing facility with Citi to support the trade finance needs of African small and medium enterprises and corporates.

The facility was announced during a signing ceremony in Washington at the World Bank’s Spring Meetings and is expected to provide a boost to businesses with high potential but limited by a lack of finance.

A statement from the impact investor on Wednesday said that the facility would address the lack of foreign currency in the region by providing trade finance liquidity to Citi’s extensive network of commercial banks, enabling financial institutions to increasingly support African businesses with imports of key commodities such as wheat, fertiliser, rice and sugar.

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BII is an investment partner to businesses in Africa, Asia, and the Caribbean that support the UK Government’s clean green initiative and create productive, sustainable, and inclusive economies in eligible markets.

The funding comes as local businesses struggle to secure key imports due to challenges precipitated by the COVID-19 pandemic and the Russia-Ukraine war, which have led to high inflation, rising interest rates and an increase in commodity prices.

According to BII, as a result, the trade finance gap in Africa has increased by approximately a third since the onset of the pandemic, climbing from $81bn in 2019 to $120bn in 2023.

The BII and Citi facility will help local businesses in underserved markets finance the import of economically productive goods, transport, essential equipment and machinery supporting the emergence of manufacturing industries in the following countries; Benin, Cameroon, Côte d’Ivoire, Rwanda, Tanzania, Uganda and Zambia.

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The UK’s Minister for Development and Africa, Andrew Mitchell, said, “This investment underlines BII’s commitment to supporting fragile economies across Africa in accessing vital goods to support food production, including fertiliser and agricultural machinery. By investing in countries where support is most needed, BII continues to take a lead in the fight against food insecurity.”

The Chief Executive Officer of British International Investment, Nick O’Donohoe, asserted, “Our investment with Citi deepens BII’s footprint across the continent and supports local businesses struggling to maintain and expand operations due to a lack of capital.

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“The facility is a testament to our commitment to tackling complex issues such as food security in Africa by extending liquidity solutions to strategic sectors. This empowers local businesses to strengthen supply chains and accelerate the flow of essential trade.”

The Head of DFI Strategic Partnerships, Citi, Stephanie von Friedeburg, added, “Citi is proud to work with BII in seeking to strengthen trade, and food security in frontier and emerging African economies. Today’s announcement brings together BII’s long history of support in the region with Citi’s unique cross-border vantage point.

“At Citi, we understand the transformative potential of global trade and are committed to bringing solutions that facilitate critical investments to enable economic growth.”

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