British International Investment and Citi Invest $100 Million in SMEs

British International Investment, an impact investor and development finance institution based in the United Kingdom, has reported that it has entered into a risk-sharing agreement worth $100 million with Citi to assist African corporations and small and medium-sized businesses with their trade finance requirements.

The facility is expected to assist high-potential companies hindered by a lack of funding. This was presented during a signing ceremony in Washington during the World Bank's Spring Meetings.

According to a statement released by the impact investor on Wednesday, the facility will help solve the currency shortage in the region by supplying trade funding to Citi's wide network of commercial banks. This will enable financial institutions to assist African businesses by allowing the importation of essential commodities like rice, wheat, sugar, and fertiliser.

Related News: British International Investment Invests $15 Million Into Nigeria’s Agricultural Sector

BII is an investment partner to companies in the Caribbean, Asia, and Africa that help eligible markets develop inclusive, sustainable, and productive economies while also supporting the UK government's clean green initiative.

The funding is provided when local companies find it difficult to obtain necessary imports due to difficulties brought on by the COVID-19 pandemic and the conflict between Russia and Ukraine. As a result, interest rates, high inflation, and commodity prices have surged. 

According to BII, as a result, the trade finance gap in Africa has increased by approximately a third since the onset of the pandemic, climbing from $81 billion in 2019 to $120 billion in 2023.

The report stated that the BII and Citi facilities will help local businesses in underserved markets finance the import of economically productive goods, transport, essential equipment, and machinery, supporting the emergence of manufacturing industries in Benin, Cameroon, Côte d'Ivoire, Rwanda, Tanzania, Uganda, and Zambia.

The UK's Minister for Development and Africa, Andrew Mitchell, said, "This investment underlines BII's commitment to supporting fragile economies across Africa in accessing vital goods to support food production, including fertiliser and agricultural machinery. By investing in countries where support is most needed, BII continues to lead the fight against food insecurity."

The Chief Executive Officer of British International Investment, Nick O'Donohoe, asserted, "Our investment with Citi deepens BII's footprint across the continent and supports local businesses struggling to maintain and expand operations due to a lack of capital.

"The facility is a testament to our commitment to tackling complex issues such as food security in Africa by extending liquidity solutions to strategic sectors. This empowers local businesses to strengthen supply chains and accelerate the flow of essential trade."

The Head of DFI Strategic Partnerships at Citi, Stephanie von Friedeburg, added, "Citi is proud to work with BII to strengthen trade and food security in frontier and emerging African economies. Today's announcement combines BII's long history of support in the region with Citi's unique cross-border vantage point.

"At Citi, we understand the transformative potential of global trade and are committed to bringing solutions that facilitate critical investments to enable economic growth."

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Back Story

In December last year, British International Investment (BII) announced its plan to sign a $15 million contract with Valency International, a Singapore-headquartered agricultural commodities trading house. 

This was announced in a statement on Tuesday, where British International Investment (BII) said that the fund was for expanding processing and warehouse infrastructure in Nigeria.

In addition to the $15 million funding, the UK’s development finance institution (DFI) and impact investor said it could invest $35 million in equity in Valency within two years of completing its initial investment.

British International Investment (BII) stated that even though agriculture continues to be a top contributor to the Nigerian economy, contributing to a quarter of the total gross domestic product and creating more jobs for one out of three Nigerians, the manufacturing sector remains underdeveloped in the local agricultural industry.