Citi and British International Investment agree $100 million risk-sharing loan agreement for Africa

LONDON, May 17 (Reuters) – British International Investment (BII) and U.S. bank Citigroup Inc (CN) have signed a $100 million risk-sharing facility aimed at quadrupling lending to small businesses across the Africa, said BII. in a report.

The agreement between Citi and BII, the UK development finance institution, aims to help Citi expand its supply chain lending on the continent, targeting small and medium-sized enterprises (SMEs) which typically struggle to access funding.

“The new master guarantee risk-sharing agreement will increase Citi’s supply chain finance volumes in Africa by up to $400 million,” BII said in a statement on Tuesday.

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“Under the facility, BII will act as a guarantor for supply chain finance facilities provided by Citi, mitigating the risk involved,” he said.

The two parties will share the risk on a 50/50 basis, meaning BII would cover half the losses in a scenario where a small business defaults on a loan from Citi.

The partnership aims to provide local currency capital to markets where SME lending is risky due to an uncertain business environment and currency fluctuations.

The aim was to target women-owned and broad-based Black economic empowerment ventures, promoting productivity and economic inclusion on the continent, BII said.

He added that the program would seek to support SME suppliers who negotiate with other buyers and wish to reduce the waiting time to receive their payment.

“For example, with SMB suppliers who are part of Citi’s supply chain finance, they can discount their receivables on the day of delivery against the due date of the invoice,” a doorman said. -word.

“This helps accelerate working capital for SME suppliers without the need to wait or borrow additional funds.”

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Reporting by Estelle Shirbon in London Editing by Matthew Lewis and David Evans

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