HSBC and IFC Launch $1 Billion Trade Finance Programme for Emerging Markets

The World Bank's International Finance Corporation (IFC) and HSBC have joined forces to address the substantial trade finance gap in emerging markets, particularly in the Asia-Pacific region. The two institutions have launched a $1 billion trade finance programme, aiming to support cross-border trade and bolster exports in critical industries. This collaborative effort is expected to foster growth and sustainability across Asia and the region's supply chains.

The programme, set up under IFC's Global Trade Liquidity Program, will equally share the risk on a portfolio of trade-related assets held by emerging-market banks in 20 countries across Africa, Asia, Latin America, and the Middle East. This initiative is a significant step towards bridging the $2.5 trillion global trade finance gap, with a focus on emerging markets.

By facilitating the flow of critical goods, creating jobs, and generating much-needed foreign exchange via exports, the programme is expected to benefit emerging market banks and their clients in the targeted countries. Improved access to finance, reduced cash collateral requirements, and access to a global network of confirming banks are among the key advantages for these institutions and their clients.

The sectors most likely to benefit from this initiative include agriculture and food, which account for 33% of IFC's Global Trade Finance Program (GTFP) activities, and African countries, which make up 40% of GTFP activities. This alignment with the World Bank's focus on food security and job creation indicates potential benefits for green technologies and women-led businesses in emerging markets.



The programme's impact on the trade finance gap in the Asia-Pacific region is expected to be substantial. With the global trade finance gap estimated at $2.5 trillion, this initiative is a significant step towards bridging the financing gap for cross-border trade. By equally sharing the risk on a portfolio of trade-related assets, the programme supports cross-border trade and bolsters exports in critical industries.

In conclusion, the HSBC-IFC trade finance programme is a welcome development in addressing the trade finance gap in emerging markets. By supporting cross-border trade and bolstering exports in critical industries, this initiative is expected to foster growth and sustainability across Asia and the region's supply chains. The programme's focus on key sectors and regions aligns with the World Bank's priorities, indicating potential benefits for green technologies and women-led businesses in emerging markets.