HSBC and the International Finance Corporation (IFC) signed a US$1-billion partnership to help banks in emerging markets increase their lending to support trade.
The risk-sharing facility between one of Hong Kong’s currency-issuing banks and the private sector financing arm of the World Bank will cover trade-related assets held by banks in 20 countries in Africa, Asia, Latin America and the Middle East.
The facility has been set up under IFC’s global trade liquidity programme (GTLP), which was established to address the growing trade finance gap in emerging markets.
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“Trade finance is the fuel that powers the global economic engine,” said Aditya Gahlaut, co-head of global trade solutions for Asia-Pacific at HSBC. “Our partnership with IFC will help ensure that trade finance gets to where it is needed [and] that funding is directed to a segment crucial to job creation and economic growth in many emerging markets.”
Reducing the trade finance gap and improving access to finance will be central to fostering growth and sustainability across Asia and the region’s supply chains, he added.
Over the last three decades, global trade has increased by an average of 5 per cent a year, but demand for trade finance has outpaced supply, particularly in emerging markets.
The gap was last estimated at US$2.5 trillion in 2022, according to a report by the Asian Development Bank last year.
“Trade finance drives growth and economic development in emerging markets,” said Mohamed Gouled, IFC’s vice-president of industries. “This facility is designed to improve the flow of trade and enable businesses to create jobs and improve livelihoods.”
Pedestrians walk past an HSBC branch at in Central, Hong Kong, on May 5, 2023. Photo: Yik Yeung-man alt=Pedestrians walk past an HSBC branch at in Central, Hong Kong, on May 5, 2023. Photo: Yik Yeung-man
The substantial and ongoing trade-finance gap in emerging markets in the Asia-Pacific region and globally must be addressed by improving access to financing for importers and exporters, said Riccardo Puliti, IFC’s regional vice-president for Asia-Pacific.
“Our strategic collaboration with HSBC aims to support cross-border trade and bolster exports in critical industries, particularly in countries that need it most,” he said.
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