Tool to facilitate trade
The Asian Development Bank’s (A.D.B) Trade Finance Programme (T.F.P) made its first foray into Pacific markets today with the signing of guarantee and loan agreements with the National Bank of Samoa and Samoa Commercial Bank.
The agreements will see the T.F.P provide up to $12 million annually to support trade activity in the South Pacific island nation.
“We’re excited about expanding the Trade Finance Program to the Pacific and doing our first transactions in Samoa, and the collaboration with our Samoan partners and the Government of Australia in getting this done has been great,” said Steven Beck, A.D.B’s head of trade finance.
“By extending extra financial support to companies and banks engaged in trade finance, we expect to create growth and jobs, particularly in small and medium-sized enterprises.”
The agreements mark the first time that banks from Pacific countries have participated in the T.F.P and follow extensive due diligence and a training workshop for 18 banks in the region conducted in Fiji last December. The T.F.P expansion into the Pacific is supported and co-funded by the Government of Australia’s Department of Foreign Affairs and Trade.
Expanding trade in the Pacific is hampered by its geography and some of the highest trade costs in the world.
A 2015 Pacific exporters survey found that access to finance is consistently identified as one of the greatest barriers to business and that trade finance guarantee programs are relatively limited.
“Currently many Samoan importers pay for goods upfront, which can mean strained cash flows and a risk of not receiving goods,” said Edward Faber, Trade Finance Program relationship manager for the Pacific.
“Under the T.F.P, A.D.B will work with the local banks to increase the use of financial products such as letters of credit, which will enable importers to pay safely, while A.D.B will also look at ways to support exporters through products like loans for pre-export finance.”
Backed by A.D.B’s AAA credit rating, the Trade Finance Programme provides guarantees and loans to over 200 partner banks to support trade, enabling more companies throughout Asia to engage in import and export activities.
With dedicated trade finance specialists and a response time of 24 hours, the programme has established itself as a key partner in the international trade community, providing fast, reliable, and responsive support to fill gaps in the region’s most challenging markets.
Since 2009, the Trade Finance Programme has supported more than 7,000 small and medium-sized enterprises across the region, with about 11,000 transactions valued at over $22 billion, in sectors ranging from commodities and capital goods, to medical supplies and consumer goods.
For more information, visit the TFP website: http://www.adb.org/tfp