As stated by the IFC, the proposed project, Global Trade Supplier Finance (“GTSF” or the “Program”) is a joint investment and advisory program to provide short-term financing to exporters (“Suppliers”) in emerging markets selling to large international companies (“Buyers”) on open account terms. In recent years, large global Buyers have increasingly moved their cross-border purchasing to open account trade as a cost-effective alternative to letters of credit and also stretched out payment terms for their purchases to maximize working capital. As a result, Suppliers in emerging markets risk losing sales and becoming less competitive unless they can gain access to new, more efficient types of working capital finance. Supplier Finance (“SF”) involves discounting Suppliers’ receivables on a non-recourse basis once the Buyer has accepted to pay on due date, thus mitigating Supplier performance risk and isolating credit risk to the Buyer. SF can thus provide a sustainable win-win solution for both Buyers and Suppliers allowing them to benefit from the lower costs associated with open account trade and the advantage of the Buyer’s (superior) credit rating to finance the Suppliers.
While the use and awareness of SF in developed economies has increased significantly over recent years, its application in emerging markets is still very limited. IFC is in a unique position to support the increased adoption of SF solutions in emerging markets with Suppliers, most of which are SMEs. In particular, one of the main obstacles faced by Buyers and commercial banks in developing Supplier Finance programs in emerging markets has been the on-boarding of SME Suppliers. SMEs require more training and interaction in order for them to better understand the working capital alternatives available to them and how best to take advantage of Supplier Finance.
IFC will use its experience in Advisory Services (Linkages) to work with local training partners to reach a far larger number of SME Suppliers, thus ensuring higher utilization rates for the program. IFC will engage with select Buyers to identify their Suppliers in emerging markets to participate in the Program and also partner with commercial banks that have Buyer relationships where IFC’s participation will clearly expand the SF program to Suppliers in emerging markets only. GTSF would enable improved access to finance for these Suppliers against Buyer risk through short term loans or guarantees covering Buyer payment risk.
As stated by the IFC, Buyer facilities dealing with the manufacturing supply chain are expected to be considered E&S Category B projects.
The investment of the IFC is divided as follows:
|IFC Investment (million USD)
IFC Program Lead:
Priyamvada Singh - Global Financial Markets
Address: 2121 Pennsylvania Ave, NW, Washington DC 20433
Phone: +1 202 458 4786
ACCESS TO INFORMATION
You can submit a request for information disclosure at: https://disclosures.ifc.org/#/inquiries
If you believe that your request for information from IFC has been unreasonably denied, or that this Policy has been interpreted incorrectly, you can submit a complaint at the link above to IFC's Access to Information Policy Advisor, who reports directly to IFC's Executive Vice President.
ACCOUNTABILITY MECHANISM OF IFC/MIGA
The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org