Evaluation of the International Finance Corporation’s Global Trade Finance Program, 2006-12

Evaluation of the International Finance Corporation’s Global Trade Finance Program, 2006-12

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As part of its strategy to support global trade, the World Bank Group seeks to enhance trade finance in emerging markets. In 2005 the International Finance Corporation (IFC), part of the Bank Group, introduced the Global Trade Finance Program (GTFP) to support the extension of trade finance to underserved clients globally. This IEG evaluation found that overall, the GTFP was a relevant response to the demand to reduce risk in trade finance in emerging markets. The program significantly improved IFCa€™s engagement in trade finance by introducing an open network of banks and a quick, flexible response platform to support the supply of trade finance. IEGa€™s evaluation covers the programa€™s operations from its inception in 2005 through FY2012. The program grew from a $500 million annual commitment to $5 billion in FY12. It accounted for 39 percent of total IFC commitments and has low costsa€”it accounted for 2.4 percent of IFCa€™s capital use and 1.2 percent of its staff costs and has had no claims to date. It is profitable as well, although not to the extent originally expected, accounting for 0.6 percent of IFCa€™s net profit. IEG found that the GTFP has particular additionality among higher-risk countries. In its early years, it was concentrated in these countries, particularly in Africa. During the global crisis, the program risk-mitigation instrument became relevant in much broader markets. Client feedback on the program has been positive. In its evaluation IEG does offer several recommendations to enhance its effectiveness, including on issues of transparency and reporting methods, as well as expanding the share of the program in needier markets. For development professionals, the lessons in this evaluation can be applied to private sector development situations, particularly mitigation of financing risks in emerging markets.Title Office Manager Investment Analyst Trade Finance Officer Senior Economist, PRMTR Manager, CLA Financial Markets ... Investment 8: Credit Risk Department Senior Manager Investment Officer, Trade aamp; Supply Chain Research Analystanbsp;...

Title:Evaluation of the International Finance Corporation’s Global Trade Finance Program, 2006-12
Author: The World Bank
Publisher:World Bank Publications - 2013-09-04

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