The UK's development finance institution and impact investor, British International Investment (BII), has extended a US$50 million trade finance facility to Ghana International Bank (GHIB) to improve the availability in Ghana of letters of credit (L/Cs), trade loans, and other trade-related financial instruments.

The facility, extended to one of Africa's leading financial institutions, also allows BII to further engage in partnerships that address the expanding trade finance gap across African markets.

In December, BII extended a US$150 million trade finance facility to Absa Group that aims to narrow Africa's trade finance gap and support businesses across the continent (DC World News, 9 December 2024).

Closing the gap

The trade finance gap is the difference between the money available to finance trade transactions and what businesses receive through L/Cs, trade loans, and other trade-related financial instruments.

Africa's trade finance gap is estimated to be between US$100-120 billion, exacerbated by global de-risking practices, where banks are being pushed to scale back involvement, thereby leaving a vacuum that local financial institutions struggle to fill.

Regional coverage

The facility for GHIB covers Sierra Leone, Liberia, The Gambia, Benin, Democratic Republic of Congo, Rwanda and Tanzania.

Under a Master Risk Participation Agreement, the US$50 million facility will enable GHIB to support more businesses and facilitate trade flows in the target countries.

Leveraging GHIB's network

The collaboration leverages GHIB's extensive network and proven track record in trade finance and allows BII to engage in a partnership that addresses the expanding trade finance gap in African markets, especially under challenging economic conditions.

BII's involvement brings essential foreign exchange dollar liquidity, critical for the import of key goods to GHIB's operating markets.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.