Risk Distribution Partnership


Risk Distribution Partnership


IFC and Proparco are partnering to facilitate access to sustainable trade finance for emerging African markets and develop intra-Africa trade. Through risk distribution, financial institution capacity-building, and SME Exporter/ Importer trade finance training programs, this partnership will increase access to much-needed trade finance in the region, and support transactions that are aligned with the Paris Alignment Framework for financial intermediaries.

Project Details

IFC and Proparco intend to implement the following actions jointly to increase trade finance in Africa, and strengthen the capacity of financial institutions and local importers and exporters:

1. Risk Distribution

IFC’s Global Trade Finance Program (GTFP) facilitates the trade finance transactions between confirming banks and issuing banks in emerging markets, by offering confirming banks partial or full guarantees covering payment risk on issuing banks. Since 2005, GTFP has issued over 83 000 guarantees for more than US$88 billion in 100 emerging markets. The program has onboarded more than 450 issuing banks since inception. In Africa, IFC has onboarded over 120 banks in 37 countries historically, and committed US$23 billion by issuing more than 15 000 guarantees.

IFC and Proparco are planning to establish a Risk Distribution Partnership, under which Proparco would risk-participate in 50 percent of certain IFC’s GTFP exposures in selected Sub-Saharan African countries for up to US$500 million. The first tranche of US$200 million will be focused on food security. When possible, IFC will prioritize intra-Africa trade exposures under the Risk Distribution Partnership. The Partnership will allow IFC and Proparco to increase access to sustainable trade finance in the region by supporting trade transactions, which will be aligned with Building Blocks 1 and 2 under IFC’s Paris Alignment Framework for financial intermediaries.

2. Strengthening the local capacity of financial institutions in Africa

Trade finance training and technical assistance for local financial institutions are integral tools to help these institutions develop trade finance and other banking skills. In addition, meeting specific transparency standards, such as detecting trade-based Money Laundering (TBML), is vital to maintaining trade and financial relations with the global markets, notably through CBRs. IFC and Proparco intend to each secure funding to expand IFC’s current training and capacity-building programs of African financial institutions.

3. Strengthening SME Exporters/Importers training programs on trade finance

Trade finance training programs for SMEs have seen considerable interest in low-income, fragile, and vulnerable economies, where companies are subject to the highest rejection rates when requesting trade finance. In this landscape, and to further support SME exporters and importers that are suffering from disrupted supply chains caused by the global context, IFC and Proparco intend to each secure funding to support trade finance training activities involving SME exporters and importers, to facilitate access to trade finance in Africa and develop intra-Africa trade.