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$11.49m Injection For Traders

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Fijian importers and exporters will have greater access to fi­nance, under a partnership between the International Finance Corporation (IFC) and HFC Bank.

The move will boost trade and sup­port economic growth and jobs in Fiji, IFC said.

An injection of US$5 million (FJ$11.49m) in HFC Bank will sup­port trade finance operations, IFC said.

It will address a trade finance gap that widened as a result of the COV­ID-19 pandemic, IFC said.

“As Fiji’s only locally owned Bank, HFC Bank provides a crucial ser­vice to Fijian importers and export­ers, and in particular micro, small and medium-sized enterprises (MS­MEs), IFC said.

HFC Bank chief executive officer Rakesh Ram said over 300 financial relationships will be offered under this initiative.

“International banks had consist­ently de-risked Pacific financial institutions, which had become a major hurdle for local players like HFC Bank,” he said.

“We are making every effort to address this both through interna­tional partners like IFC and at the Government level.

“We made significant progress in this regard and this partnership with IFC is testimony to our efforts and evidence of our capability and capacity.

“This connection with IFC will provide our clients with broad ac­cess to trade financing networks, additionally contributing towards a sustainable Fijian economy through its own bank.”

The investment under World Bank’s Global Trade Finance Pro­gramme (GTFP) aimed to resolve challenges in availability of financ­ing to support customers.

Banks like HFC Bank depend on global confirming banks to provide trade financing, IFC said.

But challenges such as individual counterparty or geographic line limits, increased capital reserve requirements, and other perceived risks, often compound the process, the fund said.

Many confirming banks have been unable to meet the needs of their existing and potential counterparts in emerging markets, IFC said.

“In 2020, this unmet potential trade financing or the ‘Trade Finance Gap’ was estimated to have increased to US$1.7 trillion (FJ$3.89 trillion) during the COV­ID pandemic from US$1.5 trillion (FJ$3.43trillion) in 2018.

“The situation is the same for banks in Fiji where SMEs account for 18 per cent of GDP, IFC said.

“Access to trade finance is crucial for businesses to compete in the global marketplace,” said IFC coun­try manager for Australia, New Zealand, Papua New Guinea, and the Pacific Islands Judith Green.

“We are not only creating a better investment climate to strengthen the financial infrastructure in the country, but also increase access to finance for MSMEs (Micro, Small and Medium Enterprises), which are critical for jobs and growth in Fiji.”

The programme is supported by the Australian Government “which is critical to projects like this and our broader development objec­tives in Fiji”, Ms Green said.

The investment in HFC Bank is aligned with the World Bank’s strategy for Fiji, which included a focus on fostering private sector-led growth, and inclusive economic op­portunities, the fund said.

It responds to the need for in­creased access to finance for MS­MEs which is a priority under Fiji’s National Development Plan (2017-2036).

IFC anticipates that in Fiji, (a country with exports to GDP of 18.9 per cent and imports to GDP of 39.5 per cent), the GTFP will enhance the flow of essential goods, prevent a potential crisis, to further build resiliency in the market’s develop­ment trajectory.

Such collaborations with insti­tutions like HFC Bank, aimed to support economic diversification, create employment opportunities, and improve the quality of life for Fijians.

Feedback: frederica.elbourne@fijisun.com.fj


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