The Asian Development Bank’s (ADB) has approved $350 million in additional headroom to further expand the scope and impact of its Trade Finance Program (TFP), that will help to close large market gaps for trade finance that hinders growth and job creation in the Asia and Pacific region.
The additional financing to TFP will complement the $100 million in additional support to extend and expand the scope of the bank’s Supply Chain Finance Program, which helps SMEs access finance and boosts their contribution to the region’s economic growth and development. The program’s transaction growth remained robust in the first four months of 2018—comprised of 1,453 transactions valued at over $2 billion, $1.3 billion of which was co-financed with the private sector.
ADB’s Head of Trade and Supply Chain Finance, Mr. Steven Beck saisd, “The increased headroom approved today by ADB’s Board of Directors will help us meet the huge surge we’ve seen in market demand for our trade finance products. It is an exciting time for the team, which is known for its excellent client services, including transaction processing in 24–48 hours.”
According to ADB’s latest Trade Finance Gap survey, Financial institutions in support of trade as well as SMEs play an important role in closing the global trade finance gap, which amounts to $1.5 trillion globally, 40% of which is coming from the Asia and Pacific region, . Trade finance is also an important component for countries to achieve the Sustainable Development Goals, as identified by the United Nations’ Addis Ababa Declaration on Financing for Development.
Supporting more than 12,000 small and medium-sized enterprises (SMEs) in developing Asia since 2009, TFP helps reduce market gaps for trade finance by providing loans and guarantees to financial institutions to support trade activities in the region.
TFP currently operates in 21 ADB member countries, with the top five most active markets including Armenia, Bangladesh, Pakistan, Sri Lanka, and Viet Nam. Backed by ADB’s AAA credit rating, it provides guarantees and loans to over 200 partner banks to support trade, enabling more companies throughout Asia to engage in import and export activities.