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British International Investment (BII) has signed a Sh 10 billion risk-sharing facility with Citi for supply chain finance for SME’s in Africa.
The new facility will provide systemic liquidity and help Citi grow its supply chain finance product across Africa.
The facility will be targeting SME suppliers and those underserved or excluded businesses.
Chris Cox, Global Head of Trade & Working Capital Solutions, Treasury and Trade Solutions at Citi said the financing will help SMEs in the Sub Saharan Sector access credit.
“Citi is committed to helping economic progress in the communities in which we operate. This agreement will enable us to expand our supply chain finance offering and increase credit to suppliers most in need, in particular the small and medium size enterprises that normally have limited access to financing.”
The facility will enable Citi to increase supply chain finance facilities to existing customers and offer them to new customers. Increasing Citi’s annual supply chain finance volumes in Africa by up to Ksh 40 billion.
This will help expand the scope of local businesses and ensure productive and inclusive economic opportunities for diverse groups and communities.
Admir Imami, Director, Head of Trade & Supply Chain Finance, British International Investment, said that the agreement demonstrates the potential for flexible British finance combined with strategic partnerships to help reinforce Africa’s supply chains, foster dynamic UK-Africa trade links, and accelerate sustainable economic growth across the continent.
Under the facility, BII will act as a guarantor for supply chain finance facilities provided by Citi, mitigating the financial risks involved.
BII and Citi have agreed to set impact criteria to ensure that flexible capital is being directed toward underserved groups and BBBEE enterprises for whom access to capital can be limited.
The increased working capital will promote financial inclusion, support SMEs and improve the resilience for diverse suppliers and buyers, which will help strengthen Africa’s supply chain and keep trade flowing across the continent.
The partnership between Citi and BII, formerly known as CDC Group, will help bring flexible capital in local currency to markets where access to finance can be limited for businesses, due to the risk which local and international financial institutions attach to lending to the SME space in Africa, and exacerbated by the Covid-19 pandemic. The facility uses an innovative structure that is a first in this market.