Citi and BII roll out Sh10b risk-sharing facility targeting SMEs

Friday, May 20th, 2022 04:42 | By
Chris Cox who is the Global Head of Trade and Working Capital Solutions, Treasury at Citi.

British International Investment (BII) has signed an Sh10 billion risk-sharing facility with Citi targeting small and micro-entrepreneurs (SMEs)  suppliers in Africa.

The supply chain finances facility will also target underserved and excluded businesses.

According to the lenders, the intention is to provide systemic liquidity and help Citi grow its supply chain finance product across Africa.

Chris Cox who is the Global Head of Trade and Working Capital Solutions, Treasury at Citi says the move will help Citi increase supply chain finance facilities to existing customers and offer them to new customers.

“This agreement will enable us to expand our supply chain finance offering and increase credit to suppliers most in need, in particular the small and medium-size enterprises that normally have limited access to financing,” he said.

Increasing volumes

Targeting SMEs in sub-Sahara Africa is set to increase Citi’s supply chain finance volumes in Africa by up to Sh40 billion annually.

Under the facility, BII which was formerly known as CDC Group will act as a guarantor for supply chain finance facilities provided by Citi, mitigating the financial risks involved.

BII and Citi will set impact criteria to ensure that flexible capital is being directed toward underserved groups and BBBEE enterprises for whom access to capital can be limited.

Increased working capital will promote financial inclusion, support SMEs and improve the resilience of diverse suppliers and buyers, which will help strengthen Africa’s supply chain and keep trade flowing across the continent. The partnership between Citi and BII hopes to bring flexible capital in local currency to markets where access to finance can be limited for businesses.

This is due to the risk that local and international financial institutions attach to the SME space in Africa, and exacerbated by the Covid-19 pandemic. 

The facility uses an innovative structure that is a first in this market.

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