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Join on Telegram Denver- The International Finance Corporation and the BMCE Bank International UK announced plans on September 1 to promote transnational trading in Africa.
According to the organizations’ joint press statement, both parties agreed to establish a “risk-sharing mechanism” with the participation of the AU’s Ministry of Foreign Affairs. Through the agreement, the partners are looking to increase financing to African importers and exporters.
BMCE UK is a subsidiary of the Moroccan-based Modern Bank of Foreign Commerce. The financial institution operates with offices in Spain, Morocco, the UK, UAE, France, Italy, Germany, Canada, the Netherlands, and China.
Alternatively, the International Finance Corporation is an international financial institution based in Washington D.C. and operates as an investment and financial development group.
The motivation behind the agreement was primarily the economic slowdown businesses reported due to COVID-19. Through implementing the new policy, the organizations hope to prevent shortages of goods such as food and construction materials due to trade restrictions. Experts from the World Bank reported that the effects of COVID-19 plunged Africa down its first economic recession in 25 years, and has severely impacted trading activity throughout the continent.
IFC stated that the trade financing agreement will cover 50% of the losses in outstanding loans from BMCE UK, up to $150 million. According to the World Trade Organization, import activity declined 16% during 2020 due to COVID-19. Due to the geographic interconnectedness of Africa, a slowdown in continental trading could be detrimental for many countries. Very few of the African nations are self-sufficient, and continental trading forms the backbone of many African economic structures.
BMCE president and General Manager Hossam Al-Haq Morsi Barakat stated the company was “very pleased” to reach the agreement with IFC that will contribute $75 million dollars to the initiative through its Global Trade Liquidity Program (GTLP). Meanwhile, Director of the IFC’s Group of Financial Institutions for Africa Manuel Ritana stated the program with BMCE will “help ensure African countries’ access to essential goods and services.”
Besides the latest program, several initiatives were started this year in efforts to promote pan-African trade and development in response to the pandemic. Several countries, including Morocco, signed agreements to promote multilateral trade and development to bolster the expanding economic capabilities in Africa, to essentially support the growing economic needs on the continent.
