• The facility targets underserved African markets such as Benin, Cameroon, Tanzania and Uganda.
• The funding helps to accelerate the flow of key agricultural commodities, and use of machinery and solutions that strengthen food security in vulnerable economies.
• This initiative seeks to address the lack of liquidity among Africa’s commercial banks.

British International Investment (BII), the UK’s development finance institution and impact investor, Wednesday announced the signing of a $100 million risk-sharing facility with Citi to support the trade finance needs of SMEs and corporates in frontier and emerging African economies.

The initiative was announced during a signing ceremony in Washington at the World Bank’s Spring Meetings and is expected to provide a boost to businesses with high-potential but limited by a lack of finance.

The investment seeks to address the critical lack of foreign currency in the region by providing trade finance liquidity to Citi’s extensive network of commercial banks, enabling financial institutions to increasingly support African businesses with imports of key commodities such as wheat, fertiliser, rice and sugar.

The BII and Citi facility will help local businesses in underserved markets to finance the import of economically productive goods, transport, essential equipment and machinery supporting the emergence of manufacturing industries in frontier and emerging economies, including Benin, Cameroon, Côte d’Ivoire, Rwanda, Tanzania, Uganda and Zambia.

The funding comes as local businesses struggle to secure key imports due to challenges precipitated by the COVID-19 pandemic and the Russia-Ukraine war, which have led to high inflation, rising interest rates and an increase in commodity prices.

As a result, the trade finance gap in Africa has increased by approximately a third since the onset of the pandemic, climbing from $81 billion in 2019 to $120 billion in 2023.

BII has supported businesses in Africa since 1948 and Citi opened its first office in the continent in 1920.

The new facility leverages their combined expertise and will potentially deepen Citi’s relationships with over 200 local banks who in turn can empower ambitious companies facing severe funding constraints in harder-to-reach markets.

Andrew Mitchell, the UK’s Minister for Development and Africa, said:

“This investment underlines BII’s commitment to supporting fragile economies across Africa in accessing vital goods to support food production, including fertiliser and agricultural machinery. By investing in countries where support is most needed, BII continues to take a lead in the fight against food insecurity.”

Nick O’Donohoe, CEO, British International Investment, said:

“Our investment with Citi deepens BII’s footprint across the continent and supports local businesses struggling to maintain and expand operations due to a lack of capital. The facility is testament to our commitment to tackle complex issues such as food security in Africa by extending liquidity solutions to strategic sectors. This empowers local businesses to strengthen supply chains and accelerate the flow of essential trade.”

Stephanie von Friedeburg, head of DFI Strategic Partnerships, Citi, said:

“Citi is proud to work with BII in seeking to strengthen trade, and food security in frontier and emerging African economies. Today’s announcement brings together BII’s long history of support in the region, with Citi’s unique cross-border vantage point. At Citi, we understand the transformative potential of global trade and are committed to bringing solutions that facilitate critical investments to enable economic growth.”

This investment contributes to the United Nations’ Sustainable Development Goals 1, 2 and 8, No Poverty, Zero Hunger, and Decent Work & Economic Growth.

CDC Group, which is soon to be renamed British International Investment (BII), said it had invested close to £2.2 billion in total in African businesses in 2020 and 2021, despite the unprecedented upheaval caused by the Covid pandemic.

Nick O’Donohoe, chief executive of CDC/BII, said: “I am delighted that we exceeded the ambitious target we set at the Africa Investment Summit held in London in 2020. This was during a period when CDC rapidly pivoted to support our portfolio and mitigate the economic fallout of the pandemic in the countries in which we invest. The role of DFIs such as CDC was vital in supporting vulnerable countries that did not have the financial reserves to protect their economies.”

“Moving forward, British International Investment intends to invest between £1.5 and £2 billion per annum between 2022 and 2026 to support the UK government’s Clean Green Initiative and to create productive, sustainable and inclusive economies in Africa, parts of Asia and the Caribbean.”

Last year saw CDC/BII make its largest ever deal in Africa – a partnership with DP World worth up to $1.7 billion – to significantly boost the continent’s ability to trade globally by expanding its port capacity.

Other key investments include Liquid Telecom, that is building a pan-African fibre-optic network, and in the Global Partnership for Ethiopia, a consortium led by Vodafone to build a new, world class mobile network in Ethiopia.

Investing in clean infrastructure will be central to BII’s strategy over the next five year period. At least 30 per cent of total investment by value will go into climate finance.

Among the major clean infrastructure investments made in Africa by the company over the last strategy period was a $100 million (£75.5 million) commitment to the Nachtigal Hydro Power in Cameroon, $50 million (£36.8 million) for the Malindi Solar Project in Kenya [which became operational recently] and $50 million (£36.8 million) for ACWA Power in South Africa.

Speaking today at the 2022 Africa Investment Conference, Chris Chijiutomi, director and head of Infrastructure Equity, Africa and Pakistan, at CDC/BII, said: “Clean infrastructure investment for British International Investment will go beyond renewables. Clean water provision, forestry and agritech, for example, will become increasingly important moving forward.

“We also continue to power Africa’s growth through our investee company Globeleq which last year succeeded in securing 1.4GW of wind and solar projects in South Africa.”

In addition to investing in utility scale projects, BII will prioritise technology-backed Venture Capital opportunities in smaller businesses that have the potential to deliver innovative, local solutions to mitigate the impacts caused by the climate crisis.