Liberia has become the latest West African country to sign up to the International Finance Corporation's (IFC's) largely letter of credit (L/C)-based Global Trade Finance Programme (GTFP).

Liberia's oldest and largest bank, Liberian Bank for Development and Investment (LBDI), has signed a US$2 million facility with the private sector arm of the World Bank.

West African participants

Liberia has now joined Ghana, Guinea and Sierra Leone as a participant in the GTFP, which was launched just over two years ago with the aim of boosting trade and improving the capabilities of banks in emerging markets (DC World News, 24 November 2004).

LBDI said it had signed up to the programme to help it expand its capacity to lend to both importers and exporters.

Civil war legacy

Development banking has been virtually non-existent in Liberia due to over 14 years of civil war that ended in 2003. Large and small businesses have had little or no access to credit facility from banks there.

"Currently import trade to Liberia is conducted on an advance cash payment system, since banks in Liberia do not have confirmed L/Cs overseas, due to the perceived risk following the civil conflict," an IFC statement explains.

Global outlook

With the US$2 million boost to Liberia's largest and oldest bank, the IFC said this "will allow Liberia to participate in the network of international confirming banks."

The GTFP operates in more than 70 countries in Africa, Asia, Latin America and the Middle East and it seeks to provide a network of regional and international confirming banks with risk coverage to finance trade.

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