The International Finance Corporation's (IFC's) largely letter of credit (L/C)-based Global Trade Finance Programme (GTFP) is making significant inroads in Africa.

One of its latest agreements involves a US$25million facility for Kenya Commercial Bank (KCB) to provide its customers with better access to trade finance.

Trade guarantees

In common with other GTFP arrangements, the agreement with KCB means that the IFC provides a guarantee for trade transactions. According to KCB's CEO, Martin Oduor-Otieno, the arrangements will particularly benefit the bank's small- and micro-enterprise customers, providing them with access to additional resources for their international business activities.

"This is a very important milestone to our growth agenda as it provides us with additional capability to handle large deals. Through this facility we would be able to issue L/Cs and guarantees with tenure of more than 360 days," he said.

Emerging markets

The US$1 billion GTFP was launched in 2005 to support trade throughout emerging markets worldwide and promote flows of goods and services between developing countries.

The IFC has consistently maintained that Africa is a particular target for the programme.

African achievements

In comments made when he signed the KCB deal, the IFC's Vice President for Europe, Africa and the Middle East, Edward Nassim, said that between July 2006 to May 2007, over US$300 million worth of guarantees had been provided under the GTFP to facilitate African trades.

Nassim is confident the programme will benefit KCB too. "KCB can enhance its capacity to provide trade solutions to its clients and significantly broaden its network of international trade banks by building relationships with other banks across the globe that have also joined the GTFP," he said.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.