Washington, D.C., August 6, 2024 – Blazing the Trail: IFC and Citi Spearhead $2 Billion Program for Sustainable Supply Chain Finance in Emerging Markets for SMEs. Largest program under IFC’s GSCF launched in 2022, it will provide access to green financing to SMEs with a critical need for financing and help in sustainable economic growth.
First Launch in Mexico
The program will launch with a USD 500 million facility in Mexico, critical in providing the much-needed financing support to suppliers undertaking both domestic and international transactions. Mexico is the first in a series of other emerging and frontier market targets as part of the expansion plan, which includes countries like the Middle East, Canada, Australia, and New Zealand. This first phase is intended to put low-maintenance, high-performance BYD battery vehicles on the road, relieving drivers of Uber from the financial burdens of activating EVs and offering riders a highly environmentally friendly mode of transport.
This will enhance accessibility to Green Financing.
The main objective of this program, therefore, is closing the gap in supply chain finance for SMEs, which traditionally have been underserved by the mainstream financial institutions. Through a host of innovative financing solutions, like those on offer under the head of e-invoice financing and reverse factoring, the idea is to improve liquidity and operational efficiency for such enterprises. By doing so, it actually allows them to compete more effectively in the global marketplace, all the while supporting sustainability through green supply chain finance solutions.
Nazli Louat, the IFC Global Director of Trade and Supply Chain Finance said, “We are excited to partner with a market leader such as Citi in this landmark program. Making finance for trade and supply chain available for transactions with the availability of sustainable goods is essential. This program would open the way for suppliers in Mexico, which are non-tradable to banking, toward such financing, hence greatly doing more with less in the financial setup of the country.”
Citi $1 Trillion Sustainable Finance
The commitment of Citi is to deploy $1 trillion into sustainable finance by 2030, within which $500 billion is to be deployed specifically for environmental finance. The aggressive target augments part of a bigger mission toward Citi’s continued support for projects that contribute to the mitigation of environmental impacts while supporting sustainable development. By the end of 2023, Citi had already achieved $441 billion toward its goal.
Murat Demirel, Head of Financial Resources and Risk Management, Trade and Working Capital Solutions at Citi, said: “We are very pleased to deepen our partnership with IFC in the area of sustainable supply chain finance. Mexico is a great place to start, and Citi looks forward to bringing this initiative to other emerging and frontier markets. This ties in nicely with our commitment to sustaining sustainable and inclusive economic growth.”
Strategic Advisory and Legal Infrastructure Emphasis
Along with investment, quite a large share of IFC-Citi partnership is advisory. It comprises developing the necessary legal and credit infrastructures which can further assist in successful supply chain finance. To develop effective supply chain finance, a good deal of experience of timely supply chain finance is also required. For instance, IFC has been working actively in Mexico to develop local credit infrastructure and introduce new kinds of financing products, hoping to build a more robust and see-through financial environment.
Promoting Green Supply Chain Finance
The program also focuses on the promotion of green supply chain finance, which is made possible through collaboration with financial institutions. Through this, the initiative also provides an effective approach for access to capital relating to environmentally sustainable projects that benefit SMEs and contribute towards wider environmental goals, such as carbon reduction and resource efficiency enhancement.
Conclusion
This giant leap by IFC and Citi is in launching the $2 billion sustainable supply chain finance program towards leveraging the frontiers of sustainable economic growth in emerging markets. This intervention will create a more inclusive, more sustainable financial ecosystem to offer critical financial support and advisory services. In this regard, with the initiative spreading across the regions, supply chain finance can be elevated to a level where green financing is readily available for businesses of all kinds, thus creating a sustainable future for the world.