The International Finance Corporation (IFC) signed trade finance agreements on 22 March with three leading banks in Sierra Leone that should enable them to provide import letters of credit (L/Cs) to the country's business community.

The three banks - Sierra Leone Commercial Bank, Rokel Commercial Bank, and Guaranty Trust Bank Limited - will each benefit from guarantees worth US$1 million under the IFC's largely L/C oriented Global Trade Finance Programme (GTFP).

Trade flows

The IFC says it places a high priority on helping Sierra Leone's private sector contribute to economic growth and recovery and argues that the GTFP will enable the three banks to further support Sierra Leonean importers and build stronger ties with international banks that participate in the programme.

The GTFP promotes trade with emerging markets worldwide by supporting flows of goods and services to and from developing countries.

Import financing

Essentially the programme involves the IFC providing credit guarantees to allow recipient banks in emerging markets to expand their trade finance coverage and participate in transactions within an extensive network of countries and banks.

"IFC's facility supports our customers in the crucial area of import financing through letters of credit," says executive director of risk management at Sierra Leone Commercial Bank , Patrick Conteh.

"Our clients will no longer be required to provide full cash cover up front, and the bank will gain more business as a result," he adds.

GTFP growth

The GTFP is the IFC's largest financing programme. So far 48 banks in over 25 emerging markets and over 90 international banks in 62 countries have joined the programme.

The IFC recently said it had doubled the programme's ceiling, allowing the World Bank affiliate to guarantee trade finance in emerging markets up to a total amount of US$1 billion on a revolving basis. (DC World News 13 February 2007).

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