IFC and HSBC Launch $1 Billion Risk-Sharing Facility to Boost Trade Finance in Emerging Markets

The initiative aims to support trade by enabling banks in 20 countries across Africa, Asia, Latin America, and the Middle East to increase their lending.

The International Finance Corporation (IFC) and The Hongkong and Shanghai Banking Corporation Limited (HSBC) announced the establishment of a $1 billion risk-sharing facility to address the growing trade finance gap in emerging markets. The initiative aims to support trade by enabling banks in 20 countries across Africa, Asia, Latin America, and the Middle East to increase their lending.

Under this facility, IFC and HSBC will equally share the risk on a portfolio of trade-related assets. It operates within IFC’s Global Trade Liquidity Program (GTLP), a platform designed to enhance trade finance availability in underserved regions.

Tackling the Trade Finance Gap

“Trade finance is the fuel that powers the global economic engine,” said Aditya Gahlaut, Co-Head of Global Trade Solutions, Asia Pacific at HSBC. “Our partnership with IFC ensures that crucial trade finance reaches areas where it is most needed, driving job creation, economic growth, and sustainable development across Asia and other regions.”

Global trade, which has grown at an average rate of 5% annually over the past three decades, faces a significant financing gap, particularly in emerging markets. This gap, estimated at $2.5 trillion, limits access to essential trade finance for businesses in developing economies.

In response, IFC has been actively bolstering trade finance support, leveraging programs like GTLP in collaboration with key partners such as HSBC.

Promoting Economic Growth and Sustainability

“Trade finance drives growth and economic development in emerging markets,” said Mohamed Gouled, IFC’s Vice President of Industries. “This facility is specifically designed to enhance trade flows and enable businesses to create jobs and improve livelihoods.”

Riccardo Puliti, IFC’s Regional Vice President for Asia Pacific, emphasized the importance of this collaboration, noting, “Our strategic partnership with HSBC will support cross-border trade and strengthen exports, particularly in critical industries in countries with the greatest need.”

A Legacy of Impact: GTLP Achievements

Since its inception, GTLP has facilitated over $80 billion in global trade volumes, enabling nearly 30,000 transactions. Through its global and regional initiatives, the program has provided support to more than 400 financial institutions in 74 emerging markets, including 30 International Development Association (IDA) and nine fragile and conflict-affected countries.

In addition to enhancing trade finance, the partnership between IFC and HSBC aims to foster more resilient supply chains, particularly in regions vulnerable to economic shocks. The $1 billion risk-sharing facility will also focus on critical sectors, including renewable energy, agriculture, and manufacturing, to promote sustainability alongside economic growth.

Future Implications

This initiative is expected to narrow the trade finance gap, facilitate greater access to financial resources for importers and exporters, and strengthen the economic infrastructure of emerging markets. As IFC and HSBC work together to address global trade challenges, the partnership sets the stage for expanded collaboration with other financial institutions to ensure inclusive growth and sustainability in the global trade ecosystem.