Africa’s economic growth is heavily reliant on trade, yet the continent continues to face significant challenges in accessing trade finance.

In a groundbreaking move to address this gap, Ghana International Bank plc (GHIB) and British International Investment (BII) have joined forces to establish a $50 million trade finance facility.

This strategic partnership aims to boost trade flows across key African economies, including Sierra Leone, Liberia, The Gambia, Benin, the Democratic Republic of Congo (DRC), Rwanda, and Tanzania.

A Strategic Partnership for Sustainable Growth

GHIB, a UK-based African financial institution, has built a strong reputation over the past 65 years for its deep understanding of African risk and trade finance.

Partnering with BII, the UK’s development finance institution and impact investor, marks a crucial step toward bridging the trade finance gap in frontier African markets.

Under a Master Risk Participation Agreement (MPRA), this facility will enable GHIB to extend financial support to businesses operating in the targeted economies.

The initiative is particularly critical given the existing reluctance of global financial institutions to extend credit to African markets due to perceived high risks and relatively lower trade volumes.

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By facilitating trade finance, this partnership ensures that local businesses have access to the essential commodities and equipment they need for expansion.

This, in turn, sustains economic activity, creates employment opportunities, and ensures a steady supply of goods for consumers at affordable prices.

Unlocking Economic Potential Through Trade Finance

Trade finance is a key enabler of economic growth, allowing businesses to access the capital necessary for imports and exports. Many African businesses, particularly those in emerging markets, struggle with financial constraints that limit their ability to engage in international trade.

This partnership aims to ease such constraints by injecting much-needed liquidity into these markets, promoting resilience and sustainable development.

The UK’s Minister for Africa, Lord Collins of Highbury, emphasised the significance of this collaboration, stating:

“I’m delighted to see two UK institutions coming together to strengthen economic ties with Africa. Africa’s trade financing gap is one of the continent’s most pressing challenges, and access to this funding will enable local businesses to trade more with the world, including the UK. This partnership serves as another example of BII’s leadership in building opportunities for growth with the UK’s partners.”

Targeted Support for African Markets

Many African economies have been struggling with external shocks, economic downturns, and limited access to international financing.

The countries included in this initiative—Sierra Leone, Liberia, The Gambia, Benin, DRC, Rwanda, and Tanzania—have faced challenges in securing trade credit, limiting their growth potential.

Leveraging Expertise for Maximum Impact

GHIB’s extensive experience in trade finance, coupled with BII’s capacity as a leading impact investor, provides a robust foundation for this partnership.

The collaboration allows for the effective allocation of financial resources, leveraging GHIB’s in-depth market knowledge and BII’s financial strength.

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The Broader Economic Impact

One of the most compelling aspects of this initiative is its potential to unlock substantial economic growth. Research suggests that every dollar of trade contributes approximately $1.30 to GDP in the targeted markets.

By addressing liquidity constraints and improving access to trade finance, this partnership paves the way for increased economic activity, job creation, and long-term stability.

Additionally, BII’s involvement ensures the provision of crucial foreign exchange liquidity, which is essential for the import of key goods into GHIB’s operating markets. This not only enhances trade but also strengthens economic resilience in the participating countries.

Looking Ahead: A Model for Future Trade Finance Partnerships

This collaboration between GHIB and BII serves as a model for future trade finance partnerships across Africa.

By combining institutional expertise with financial resources, this initiative demonstrates the potential for targeted interventions to address systemic financial challenges.

As the partnership unfolds, it is expected to facilitate a more dynamic trade environment, enabling African businesses to expand their reach and integrate more effectively into global trade networks.