Commonwealth helps Small States access trade finance [1]
Thursday, April 19, 2018 - 10:41. Updated on Thursday, April 19, 2018 - 10:43.
An innovative way for Commonwealth Small States to have easier access to international trade finance was launched at the Commonwealth Heads of Government Meeting in London early this week.
An initial capital of $5 million for the scheme was provided by India, Sri Lanka, Mauritius and Malta.
The scheme, call the Commonwealth Small States Trade Finance Facility, will be managed by the Standard Chartered Bank, and the Bank of Baroda.
The Commonwealth Secretariat will effectively acts as a guarantor on loans secured to develop trade and sustain economic and social development. This guarantee could release $100 million of incremental trade finance over a three-year period to any of the 31 Commonwealth nations classified as small states.
Tonga is one of the 31 Commonwealth Small States:
Africa: Botswana, Lesotho, Mauritius, Namibia, Seychelles and Swaziland.
Caribbean and the Americas: Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Trinidad and Tobago.
Europe: Cyprus, Malta.
Pacific: Brunei Darussalam, Fiji, Kiribati, Nauru, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu.
The Commonwealth’s Secretary-General, Patricia Scotland, said: “This new scheme is an example of the innovative and collaborative approaches that are pioneered by the Commonwealth; they have a hugely positive impact on the lives and livelihoods of people in our smaller and more vulnerable member countries.
“Without such a scheme, small states find it difficult to access the funds they need to diversify their economies and build inclusive prosperity by expanding trade. This impairs their ability to achieve the Sustainable Development Goals.”
The trade finance facility has taken five years to develop by a working group including the International Finance Corporation, Government of Malta, Central Bank of Malta, Export Import Bank of India and the Commonwealth Secretariat.
This working group developed a mechanism, in the form of a guarantee facility, that will encourage international banks to offer higher trade finance lines to financial institutions in the small states by reducing their credit risk.
The concept is based on a highly innovative use of blended finance that seeks to achieve maximum impact with minimal levels of official assistance. The facility is hosted and administered by Malta.
Pilot countries selected for the spring launch include Bahamas, Botswana, Brunei, Dominica, Fiji, Mauritius, Namibia and Seychelles.
The 2018 Commonwealth Heads of Government Meeting, under a theme – “Towards a Common Future” started in London on 16th until 20 April.
A Tongan delegation to the Commonwealth Heads of Government Meeting is led by the Prime Minister Hon. ‘Akilisi Pohiva.