The International Finance Corporation – the IFC – has consented to a US$500mn risk-sharing facility with Santander aimed at expanding access to supply chain finance programmes for suppliers when it comes to emerging markets.
The facility encompasses Santander programmes established globally and is projected to facilitate US$1.5bn of supply chain finance transactions in the course of the next 3 years, said the IFC, which is the financing arm of the World Bank Group.
The US$500mn risk-sharing facility with Santander will target suppliers in emerging economies that often have limited borrowing options, including the likes of SMEs, and will allow them to secure funding based on the credit history of their buyers, it said.
The central bank said the facility can assist businesses in making investments, develop their operations and also generate jobs through enhancing payment cycles along with increasing liquidity.
The development finance institution stated that the agreement comes at a good time, considering the effects of supply chain disruptions and high interest rates as well as shrinking liquidity in banks.
These trends have in a way quite sharply restricted the availability of working capital as well as trade finance and are most strongly felt by smaller suppliers who already possess less of a financial cushion.
According to the IFC, in this context, supply chain finance is a tested and effective tool that helps businesses maintain liquidity, build robustness, and move goods securely throughout the global markets.
As per the IFC’s global director of trade and supply chain finance, Nathalie Louat, programmes make sure liquidity goes on to reach major businesses and intermediaries ‘just when markets are seeing more volatility.
Supply chain finance has been an important area of expansion for the institution, Louat informed GTR earlier following the introduction of its Global Supply Chain Finance Program in 2022.
Santander will leverage the knowledge of emerging markets of IFC, its development directive and its capacity to mobilize capital so as to expand the reach of its supply chain finance offerings, said the global head of private debt mobilisation at Santander, Stefano Sabbadini.
He added that partnering with IFC helps them to go further than they would be able to do on their own.
