IFC and StanChart Partner on KSh 38B Trade Finance Deal for African SMEs
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The International Finance Corporation (IFC) and Standard Chartered Bank (StanChart) have announced a new KSh 38 billion risk-sharing facility aimed at expanding access to trade finance for small and medium-sized enterprises (SMEs) across eight African countries.
The facility, about USD 300 million, seeks to address a persistent trade finance gap in Africa, which is currently estimated at USD 81 billion annually.
The trade finance deal will see the IFC contribute USD 150 million, with Standard Chartered providing the remaining USD 150 million. The two institutions will share the credit risk on a portfolio of trade finance assets, allowing StanChart to increase its lending to SMEs in higher-risk markets without absorbing the full exposure.
The facility will target SMEs operating in Ghana, Côte d’Ivoire, Kenya, Egypt, Nigeria, South Africa, Tanzania, and Zambia. These markets have a strong base of SME activity but face long-standing liquidity constraints and limited access to credit.
The trade finance deal is expected to support over 300 suppliers and indirectly benefit more than 1 million farmers, particularly those in agri-export value chains.
The facility will focus on sectors such as agribusiness, healthcare, pharmaceuticals, manufacturing, energy, construction, and telecommunications. It is also designed to prioritize women-led enterprises, a group that faces disproportionately high barriers to finance.
According to the IFC, the facility is projected to enable over USD 450 million in gross transaction volumes. The Standard Chartered trade finance deal will also offer local currency financing options to help SMEs manage currency volatility, a frequent obstacle in cross-border trade.
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This partnership builds on a series of earlier collaborations between IFC and Standard Chartered. In 2019, the two institutions launched a USD 1 billion risk-sharing facility to support trade finance in Asia, the Middle East, and Africa.
In 2023, StanChart invested USD 700 million in the IFC’s Global Trade Liquidity Programme (GTLP), expanding support to financial institutions during periods of global trade disruption.
The current IFC, StanChart trade finance deal reinforces both organizations’ roles in Africa’s development financing landscape. In fiscal year 2024, IFC committed USD 56 billion globally, of which USD 14.2 billion went to Africa. This included USD 8.5 billion in long- and short-term financing across sectors.
The IFC finance for small and medium-sized enterprises (SMEs) across eight African markets is central to its strategy in Africa, where SMEs contribute 30% to 60% of GDP and provide 67% of employment.
Despite their importance, the global SME finance gap stands at USD 5.7 trillion, increasing to USD 8 trillion when informal businesses are considered.
Standard Chartered, which operates in 60 countries with over 86,000 employees, generates around 90% of its income from Asia, Africa, and the Middle East.
The bank’s established presence in these regions makes it well-suited to deliver StanChart finance for small and medium-sized enterprises (SMEs) across eight African markets under this facility.
The IFC, StanChart trade finance deal follows a successful model, such as the prior facility that supported ETC Group’s export of grains and import of fertilizers in Kenya, Tanzania, Malawi, and Benin.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.
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