New financial boost for businesses in developing countries from UK government
2 April 2009
Businesses in developing countries are struggling to survive due to the economic downturn and need urgent financial support, said Secretary of State for International Development Douglas Alexander today.
At the London Summit, world leaders are working to stabilise financial markets and help families and businesses across the world to get through the recession.
And the UK Government today intends to take practical action to support firms across the globe, helping stimulate trade in developing countries and ensuring sustainable growth.
This will be done through the World Bank’s new initiative called the Global Trade Liquidity Programme (GTLP) set up to support small and medium businesses by helping address the trade finance shortage in developing countries through international banks.
The UK government, through its development finance institution CDC, intends to make a contribution of up to £300 million to the GTLP.
Douglas Alexander said: "Private sector businesses are an essential engine of growth and play a vital role in stimulating global trade, which provides a lifeline to millions of people across the globe.
"People in developing countries have been disproportionately hard-hit by the economic crisis. This money will help firms keep going during the difficult climate and help to protect and create jobs.
"This is not an initiative to help make commercial banks richer. Participating banks must all commit to using the money to support trade in developing countries. In the first phase, this will include Kenya, Angola, Ghana, Nigeria, Mauritius, Malawi, Mozambique, Seychelles and Zambia."
The proposed sum alone could help fund between £2 billion and £3 billion of trade over the next two years, helping small and medium firms to import and export products. The UK money will be invested in the GTLP on a loan basis.
The shortage in trade finance, due to the current economic crisis, is a significant threat to world trade – already projected to decline by about 9% this year. The World Trade Organisation has suggested there could be a global shortfall of between $100bn and $300bn.
Notes to editors
1. The GTLP, which is due to become operational May, will provide capital to
international banks specialising in trade finance in the developing world over a
period of two, may be three years.
The programme raises funds from development finance institutions, governments,
and works through global and regional banks to extend trade finance to importers
and exporters in developing countries.
The GTLP will be based on a commitment of $1 billion from IFC, a member of the
World Bank Group. The IFC is seeking a further $3 billion to $4 billion from
donors. It is expected to support at least $30 billion of trade over three
years.
2. CDC is the UK Government’s development finance institution. CDC’s mission is
to generate wealth by providing capital for investment in sustainable and
responsibly managed private sector businesses. It uses its own balance sheet to
invest in private equity funds focused on the emerging markets of south Asia and
sub-Saharan Africa. For further information visit
www.cdcgroup.com
For more information call the DFID press office on 0207 023 0600.
