Algerian small and medium-sized businesses will most likely be the prime beneficiaries of a new revolving trade enhancement facility announced by the International Finance Corporation (IFC).

The facility will provide Algerian companies - mostly small and medium businesses - access to letters of credit (L/Cs) through eligible Algerian banks.

Risk sharing

According to the World Bank's private sector development arm, Algerian businesses could prise as much as US$40 million out of the facility. The IFC will guarantee 50 per cent of the three-year confirmation line, to be managed by BNP Paribas Paris (BNPP).

Sami Haddad, IFC director for Middle East and North Africa said "Algerian companies need effective credit options to help them meet the demands of today's market. This trade enhancement facility gives them the flexibility in trade terms necessary for them to grow and prosper," he added.

The facility will provide local commercial banks with access to confirmation of L/Cs with tenors of up to 24 months. In the risk sharing structure, BNPP will act as the confirming bank on the L/Cs. BNPP has wide experience in Algeria and the Middle East and has a full-fledged branch in Algiers.

Bank support

In addition to supporting small and medium-sized businesses, the trade enhancement facility aims to contribute to building stronger confidence in the Algerian private and commercial banking sectors.

The IFC said its investment reflects its commitment to supporting the development of the Algerian private sector by supporting small and medium-sized businesses through local financial institutions. With a view to help strengthen the private sector, IFC has also invested in two commercial banks, a leasing company, and an investment bank in Algeria.

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