CDC Group (“CDC”), the UK’s development finance institution, and Standard Chartered Bank (“Standard Chartered”) announced the signing of a memorandum of understanding on April 16 for a supply chain finance programme that will increase financing for SME suppliers in Africa and South Asia, thereby boosting economic growth and trade opportunities. The first countries to benefit from this scheme are expected to be Nigeria, Uganda, Ghana and Kenya.
SMEs in the supply chains of developing countries must often wait long periods (typically 30-90 days) to receive payment for delivered products. To finance this working capital gap and keep the business going while awaiting payment, suppliers often need to provide collateral to borrow short-term funds from their local bank. Many struggle to do so, meaning that their business growth and production levels are constrained.
The partnership between CDC and Standard Chartered will provide a financing ‘bridge’ that gives suppliers the opportunity to get paid early while enabling buyers in a supply chain to maximize their working capital. This improves cash flow for both buyers and suppliers, while boosting transparency and cutting risk across the supply chain. This partnership is a unique example of how blended finance helps boost international trade as an engine for inclusive economic growth and is central to achieving the Sustainable Development Goals (SDGs).
Source: CDC Group