British International Investment (BII) and U.S. bank Citigroup Inc have signed a $100 million risk-sharing facility aimed at boosting lending to small businesses across Africa by up to four times that amount, BII said in a statement.
The deal between Citi and BII, Britain’s development finance institution, aims to help Citi expand its supply-chain lending on the continent, targeting Small and Medium Enterprises (SMEs) that usually find it hard to access financing.
“The new Master Guarantee risk-sharing agreement will boost Citi’s supply chain finance volumes in Africa by up to $400 million,” BII said in a statement published on Tuesday.
The partnership is aimed at providing capital in local currencies to markets where lending to SMEs is risky, with BII taking on some of the risks that borrowers could default or that currency fluctuations could result in losses.
“Under the facility, BII will act as a guarantor for supply chain finance facilities provided by Citigroup mitigating the risk involved,” .The aim was to target women-owned and Broad-based Black Economic Empowerment businesses, promoting productivity and economic inclusion on the continent.” BII as quoted by Yahoo finance.