IFC & Union Banks Form An Alliance To Boost Trade Finance In Nigeria
As per the latest news around the world of banking, the leading member of the World Bank Group IFC has come into an agreement with Union Bank to come up with a finance guarantee facility, as per their latest announcements. The expected partnership between these two banking union’s will prove to be an effective boost for Nigeria and will provide them with access to finance for local business, as a move to increase international trade from the country.
Trade finance has been one of the most effective keys towards the exponential growth of a business in the trying times of Covid-19, where the entire trade supply chain is facing a derail in management.
Considering the major challenge of last-mile availability for suppliers in recent times, trade finance has proved to be a viable solution to keep the workflow smooth and running. Connecting businesses across the world with suppliers has been one of the major USP of such a finance setup.
Talking of the recent announcement that was made, the new partnership is all geared up to aim and initiate aid to the country’s economy from the impact of the COVID-19 pandemic. The $40 Million facility that comes under the IFC’s Global Trade Finance Program (GTFP) will come into the support of the Union Bank and work to cement working partnerships with nearly 300 major banks within the GTFP network.
At the time their operations resume, the partnership facility will allow the users to get a seamless flow of trade credit into the Nigerian market. Considering the current situation of trade and flow of the supply chain across the globe, imports are a rare situation. For a country like Nigeria that depends majorly on the imports to keep their businesses up and running, the facility will prove to be a critical help for the country’s chance at doing exports to generate the much-needed foreign exchange.
According to the terms of the agreement, the GTFP is setting up meetings with the banks to come over with partial or full guarantees that will be covering payment risk on Union Bank’s trade-related transactions.
The suggested guarantees which are being sought by the GTFP are said to be transaction-specific and are expected to be demonstrated and covered by a variety of underlying instruments. The list of instruments that will cover the agreement would include letters of credit, guarantees, trade-related promissory notes, advance payment guarantees, and bonds.