Cobalt Blockchain (COBC) – expected to be the world's first blockchain-based provenance system for cobalt – has signed a letter of intent for a $10 million revolving trade finance facility with United Bank for Africa (UBA). Proceeds will be used for purchasing cobalt concentrates (1% minimum, 3-4% average cobalt) from a mining cooperative in the Democratic Republic of the Congo (DRC). The supply agreement guarantees COBC a supply of cobalt concentrate of 40,000 tonnes per annum.
IFC has provided a MXN350 million loan ($18 million) to Altum Capital, a private debt fund that seeks to expand financial inclusion in Mexico by providing financing to non-banking financial institutions and directly to small and medium enterprises (SMEs).
Traxia, the first crypto project to be built on top of the Cardano blockchain, has been listed on the KuCoin exchange.
Traxia – a ‘decentralized global trade finance ecosystem’ which aims to create a open marketplace for users and businesses to exchange invoices as short-term assets using Cardano’s smart contract technology – has launched following an initial coin offering that raised $15.1 million. The platform, developed by LiqEase, is scheduled to fully integrate with the Cardano platform by the end of this year.
Financial returns at UK development finance institution CDC will decline over the next five years, as part of a strategy to take on more risk after almost a decade of above-average return on investment, according to CDC’s chairman Graham Wrigley. HM Treasury requires that CDC provide an average 3.5% return on investment across its portfolio, as agreed in the 2012 Investment Strategy. Since then, CDC has averaged a 7% return, with a 10.3% average between 2012-2016.
As part of the new five-year strategy agreed last year, CDC has committed to investing in new, higher-risk ways to “tackle specific market failures that hold back development.” It has expanded its metrics for measuring impact beyond job creation, and is committed to looking for new ways to use its financing to mobilize other sources of capital and improve transparency and accountability. Since 2015, CDC has also shifted its portfolio to investments exclusively based in Africa and South Asia, with a higher potential development impact that Wrigley says is a worthwhile trade-off for higher risk and lower financial returns.
KazakhExport and VTB Bank (Kazakhstan) have signed an agreement on conditional bank deposits that will open up new opportunities for Kazakh exporters. KazakhExport will be able to place conditional deposits with VTB for further provision by the bank of pre-export financing. “Now exporters can replenish their current capital on the most favorable terms, and along with that insure risks when conducting export transactions,” says Dmitry Zabello, chairperson of VTB Bank (Kazakhstan).
Ethiopia’s Ayka Addis Textile & Investment Group, which has reported massive losses for the past four years, is to receive a pre-shipment credit from Development Bank of Ethiopia (DBE). The company owes DBE ETB2.3 billion ($82 million) in project debt and working capital credit. DBE’s management had taken a strict credit stand against the borrower citing its outstanding loan, repayment history and loan portfolio, but the DBE board has opted to extend assistance to enable Ayka to continue importing and exporting.
OPIC has approved $1.8 billion in financing and political risk insurance for multiple projects in Latin America, Eastern Europe, Asia and Africa. The projects include:
$250 million in financing to support the $932 million Pasto-Rumichaca toll road 29-year PPP concession in Colombia which is sponsored by Concesionaria Vial Union del Sur’s (a joint venture between Sacyr Concesiones and Herdoiza Crespo Construcciones).
$250 million in political risk insurance related to the Naftogaz Purchase Facility which helps Naftogaz build up gas reserves during the summer months to maintain a reliable supply and affordable prices.
$100 million in financing to IndusInd Bank to support microfinance lending to women.
$100 million to Africell to support the upgrade and expansion of mobile telecommunications networks in Gambia, Sierra Leone, Uganda and Democratic Republic of the Congo.
$225 million in financing to Mytrah Vayu (Sabarmati) Private Ltd. to support the development of a 252MW wind farm in Tamil Nadu, India.
Up to $250 million in financing to Azul Linhas Aereas Brasileiras for engine maintenance on its short-haul fleet serving these markets.
$100 million in financing to support the expansion of SME, consumer and housing lending in El Salvador, Guatemala, Honduras, Costa Rica, Nicaragua and Panama.
$142.5 million in financing to CrediQ to support the expansion of vehicle finance programs for small and medium enterprises in sectors such as construction, agriculture and transportation.
Standard Chartered’s unique supply chain finance solution offers a win-win for both buyers and suppliers. By Michael Sugirin, Head of Open Account and Trade Implementation, Transaction Banking, Standard Chartered.
FCI members have unanimously voted to make Shariah compliant factoring a part of FCI’s group of supported business finance solutions. Changes to the general rules of international factoring will now ensure that this branch of factoring is facilitated within the FCI member network, allowing support for this type of business on a fully cross-border basis.
African Development Bank Board has approved a $15 million equity investment in Africa Food Security Fund (AFSF), to support enterprises in agri-business SMEs in Africa. AFSF is a second-generation fund targeting a total capitalization of $100 million. The Fund will invest in potential high-growth SMEs operating in the food and agriculture value chains across sub-Saharan Africa. The fund manager is Zebu Investment Partners.
IFC and Dalus Capital are providing a $10 million capital investment to eFactor Network, a Mexican fintech company specialized in factoring and working capital. Through a multifunding and multicurrency electronic factoring marketplace, eFactor Network allows the connection between large buyers, suppliers and financial institutions (banking and non-banking) to optimise working capital by realising electronic discounts in real time. Proceeds from the capital injection will be used to develop new financial products for SMEs.
Desjardins Capital and Siparex Group, a French private equity firm, have launched their Transatlantic Fund, raising an initial $120 million. Bpifrance, Capital Regional et Cooperatif Desjardins (CRCD) and Export Development Canada (EDC) have signed on as sponsors. The Transatlantic Fund will invest in French and Quebec small and mid-sized businesses, facilitating North American opportunities for the former and European opportunities for the latter.
African Trade Insurance expects its annual insured trade and investment portfolio to double to $7 billion within five years, driven by new members including Ghana and Nigeria. Chief executive George Otieno says the annual portfolio will rise by $1 billion this year to $3.5 billion, and double to about $7 billion by 2022. The investment risk insurer is owned by 14 African nations and other organisations such as the African Development Bank.
Singapore-based vCargo Cloud (VCC) has signed a memorandum of understanding with Kenya’s National Chamber of Commerce and Industry to roll out blockchain-based electronic certificates of origin in the country. The solution significantly improves transparency, security and efficiency in authenticating trade documents. Through VCC’s blockchain-based eCO platform, processing of COs will be hosted on a tamper-proof distributed ledger, which can then be authenticated and accessed by various stakeholders of the platform.
Climate financing by the world’s six largest multilateral development banks (MDBs) – the World Bank group, African Development Bank, Asian Development Bank, EBRD, EIB and the Inter-American Development Bank group – rose to a seven-year high of $35.2 billion in 2017, up 28% from the previous year.
The MDBs’ latest joint report on climate financing says $27.9 billion, or 79% of the 2017 total, was devoted to climate mitigation projects that aim to reduce harmful emissions and slow down global warming. The remaining 21%, or $7.4 billion, of financing for emerging and developing nations was invested in climate adaptation projects that help economies deal with the effects of climate change such as unusual levels of rain, worsening droughts, and extreme weather events.
Speaking at a meeting of the WTO Working Group on Trade, Debt and Finance on 8 June, director-general Roberto Azevêdo highlighted the significant progress made in improving access to trade finance, in response to the persistent gaps in provision which affect small businesses and poorer countries in particular.
Azevêdo outlined progress in a number of areas, including working with partners to enhance existing trade finance facilitation programmes. In 2016, these programmes supported around $22 billion in trade transactions. In 2018 they are set to reach over $35 billion – an increase of more than 50% in just two years.
Regulation tech start-up kompany and Raiffeisen Bank International (RBI) have signed a contract for the development and implementation of a group-wide next-generation business KYC solution. The KYC solution, which is nearing the implementation phaser, was developed by integrating multiple services into a cloud-based platform, thus streamlining the compliance steps in accordance with RBI’s structure and business demands. RBI customers will benefit from several new value-added functionalities such as real-time, automated and cross-border commercial register checks.
Amber Road has integrated Dow Jones Risk & Compliance’s Sanctions Ownership Research (SOR) list into its Global Knowledge database. The database helps automate RPS processes and vets customers, suppliers and other trading partners against 600-plus restricted and sanctioned party lists sourced from government institutions worldwide.
G7 development finance institutions (DFI) plan to mobilize $3 billion by 2020 for investment in business activities by women. The ‘2X Challenge: Financing for Women’ involves FinDev Canada, CDC, OPIC, Cdp, Proparco, JBIC and JICA, with support from DEG.
Ghana EXIM Bank – founded in 2016 – is making significant project funding inroads with SMEs after just one year of operations. The development bank has approved GHS417 million ($88.5 million) to support SMEs in Ghana’s One District, One Factory (1D1F) Initiative – designed to accelerate Ghana's industrialization and socio-economic development – and has backed a number of projects in the agri and pharmaceutical sectors.
The Indian government has been making consistent progress in opening up formal credit lines to Indian farmers - total lending of 5.11 lakh crores in 2011-12 jumped to 8.45 lakh crores in 2014-15. But with many borrowers struggling to meet repayments, national and state governments are having to give waivers again for agricultural loans.
Swissquote, Temenos and Lenz & Staehelin have established a new organisation – the Capital Markets and Technology Association (CMTA) – in Switzerland to facilitate the use of blockchain technology in financial markets. A not-for-profit agency, CMTA will focus on creating open standards and toolkits that can be employed by various types of companies to raise capital by applying new technologies and digitalization.
KazakhExport has agreed to provide 90% cover for Agricultural Credit Corporation (ACC) working capital loans to Kazakh farmers. In addition, ACC will be significantly cutting due diligence times on future lending decisions.
Ireland's state-owned economic development agency Enterprise Ireland has announced the launch of a €750,000 Competitive Start Fund for fintech start-ups. The fund will be directed to ventures using artificial intelligence, machine learning, virtual reality, the internet of things, blockchain and the cloud.
Canada-based Luge Capital is looking for early-stage fintech companies and artificial intelligence solutions applied to financial services with its $75 million round of financing. Luge says it may expand the fund up to $100 million in the coming months.
The group will concentrate on Seed and Series A financing, with initial investments between $250,000 and $2 million.
Timelio, an Australia-based online marketplace for invoice and supply chain finance, has surpassed $250 million in invoice funding. The group aims to improve cash flow for businesses and enable them to get paid immediately without waiting up to 90 days for customers to pay.
The International Islamic Trade Finance Corporation (ITFC) and Asia Alliance Bank in Uzbekistan have signed a line of Murabaha Trade Financing Agreement. It represents the first operation of ITFC in Uzbekistan, and marks the start of the implementation of the $100 million Framework Agreement. The line of financing will particularly help small and medium-sized enterprises.
Payments Canada, the country's financial market infrastructure for payments, has announced that Peter Dodic has joined its Executive Leadership Team as Chief Risk Officer.
He was previously Managing Director, Operational Risk Management at BMO Financial Group.
Customer non-payment continues to hamper the growth of small subcontractors working in the UK construction sector, according to a study by Bibby Financial Services (BFS) and The Vinden Partnership.
Sixty per cent of subcontractors have suffered from bad debt in the past 12 months, with the average firm writing-off £16,149 each year, the research - undertaken in the aftermath of the collapse of Carillion - found. Seventeen per cent said the most common reason for not receiving the full amount billed was due to a customer going out of business.
Specialist Finance Director at BFS, Kash Ahmad, said: "Bad debt is a serious issue for many construction businesses and, across the entire sector, more than £2.8 billion is written-off each year, representing a significant economic leakage."
Mumbai-based supply chain finance start-up CredAble has raised Rs 100 crore in series A funding from Alpha Capital. Of this, Rs 25 crore comes in equity and the rest is debt funding. The funds will be used to scale up operations and technology, as well as onward lending. The company has also applied for a non-banking financial corporation license and is expecting to get it within a month.
Bank of China's Luxembourg branch has signed a $1.05 billion (€890 million) syndicated loan with a group of ten international banks. The facility is to be used for general corporate purposes. The deal pays a margin of 55 bps p.a. above USD LIBOR and has a bullet maturity with a two-year tenor, extendable by a further year. The deal was led by Wells Fargo Bank, London Branch, as sole co-ordinator and documentation agent, with ING Bank, London Branch being appointed to be facility agent.
Scorpio Bulkers has received a commitment for a loan facility of up to $30 million from ING Bank to refinance two of the company's Kamsarmax bulk carriers, SBI Zumba and SBI Parapara.
The loan facility has a final maturity date of five years from drawdown date and bears interest at Libor plus a margin of 2.20% per annum. This loan facility increases the company’s liquidity by about $8 million after repayment of the vessels' existing debt.
Trade finance business is booming at the Asian Development Bank. Katharine Morton spoke to Steven Beck, the ADB’s head of trade and supply chain finance, at the ICC Banking Commission annual meeting in Miami about the reasons underpinning the growth and whether derisking is having an impact.
London-headquartered fintech start-up MarketInvoice has appointed Rija Javed as its Chief Technology Officer (CTO). She joins from Wealthfront, a Silicon Valley-based start-up, to become one of the first female CTOs at a fintech in the UK.
De Nederlandsche Bank (DNB), the central bank of the Netherlands, has concluded after three years of experimentation that blockchain technology fundamentally fails to pass muster as a realistic replacement for current financial market infrastructures.
DNB created a series of four prototypes named Dukaton that gradually scaled from a simple Bitcoin-style mining operation all the way through to a fully-functioning payments processing infrastructure operating on a distributed ledger.
The bank found definitive limitations in capacity, efficiency and certainty of payment, that compared unfavourably against current systems such as the Eurosystem's interbank settlement network Target2.
DNB's conclusions are slightly at odds with those of the South African Reserve Bank, which has just released details of Project Khokha, a proof of concept designed to simulate a 'real-world' trial of a distributed ledger technology-based wholesale payment system.
The results show that the typical daily volume of the South African payments system could be processed in less than two hours with full confidentiality of transactions and settlement finality.
The blockchain lead at Mizuho Financial Group is reportedly leaving the firm. Ikuma Ueno, senior digital strategist at the Japanese banking giant, said in the leaving message to colleagues that he will depart on June 13 to take up a new role in Singapore later this year. He spent three years at Mizuho.
A first group of 14 Italian banks has started testing a blockchain system with the support of ABI Lab, the technological laboratory supported by the Italian Banking Association. The new tech will be applied to interbank processes to increase data transparency and visibility, speed in executing transactions, the participants say, as well as allowing checks and exchanges directly within the application.
The banks are Banca Mediolanum, Banca Monte dei Paschi di Siena, Banca Sella, BNL BNP Paribas Group, Banca Popolare di Sondrio, Banco BPM, CheBanca! - Mediobanca Group, Credito Emiliano, Credit Agricole, Credito Valtellinese, Iccrea Banca, Intesa Sanpaolo, Nexi Banca, and Ubi. The group will be using R3’s Corda blockchain technology.
SWIFT has released the names of the ten Chinese banks that have gone live on its global payments innovation initiative (gpi) since its launch in 2017.
The banks are Bank of China, Industrial and Commercial Bank of China, Bank of Communications, China Minsheng Bank, China Guangfa Bank, China Construction Bank, Bank of Jiangsu, Shanghai Pudong Development Bank, China Citic Bank, and China Zheshang Bank. Seventeen other Chinese banks have committed to SWIFT gpi in China and are in the process of going live.
Versara Trade - a trade finance platform powered by crypto credit enhancement - is being prepped for official launch in Q1 2019. The first model of its kind, Versara will leverage crypto-assets to enhance credit options for borrowers and mitigate risk factors for credit providers, thereby bridging gaps in trade finance availability. The scheme is focused on enabling the growing SME market obtain funds.
Vinay Mendonca, the global head of product and propositions for global trade and receivables finance at HSBC, has warned that 'digital islands' could inhibit blockchain trade.
He said in the best case, blockchains and other digital platforms should do for the global value chain what shipping containers did for the physical transportation of goods. Just as the standardized dimensions of containers allowed them to move around the world easily from ship to rail to truck, DLT with data standards and interoperability ought to create seamless flows of value. But without such standards, trade finance could end up on "digital islands", or silos disconnected from each other, he said.
Fourteen banks responsible for about half of India's internal trade have joined a consortium that aims to introduce blockchain technology in order to speed up processes and reduce hurdles to approving new loans.
The banks have signed up for the India Trade Connect consortium, which hired the Bengaluru-based software firm Infosys, to develop a blockchain platform for loans that back trade transactions within India.
Alternative lender BlueVine has secured $60 million in equity funding from Menlo Ventures. BlueVine said it will use the funds to expand its invoice factoring and business line of credit products, as well as to explore new products for small and medium-sized enterprise borrowers.
Switzerland-based sports shoe manufacturer On has introduced the supply chain management software Osca. The cloud-based SCM system of Germany-based Setlog GmbH controls all transport-relevant processes from the order to the delivery. The system replaces e-mail and Excel lists as the central communication platform for all suppliers. The first manufacturers in Vietnam went live in May and China will follow in the upcoming weeks.
SWIFT has announced that Brazil's Banco Bradesco has joined its global payment innovation (gpi) service to increase the speed, transparency and traceability of cross-border payments. Almost 50% of gpi payments are completed and credited to end beneficiaries' accounts in less than 30 minutes.
Large UK firms are using "supply chain bullying" to "squeeze their suppliers, delaying payments to improve their own cash flow", Mike Cherry, chairman of the Federation of Small Businesses (FSB), wrote in a letter to the companies.
Cherry's letter called on companies to "personally shine a light" on how they pay suppliers, and to report on payment terms. The FSB has said that about 80% of members have reported being paid late, and a third of the membership said that payment terms had "deteriorated" over the past two years. Just 4% had reported improvement. A third of all payments are late and roughly 50,000 firms have failed each year, at least partially due to poor payment timeframes.
Financial regulators across Europe, North America and Asia are adopting a variety of strategies to encourage the development of financial technology in their jurisdictions, which does not bode well for the FCA’s ambitions to promote cross-border consensus.
Abu Dhabi Ports subsidiary Maqta Gateway has developed and launched its own blockchain solution, Silsal, with the aim of improving efficiency in the shipping and logistics industry by reducing paperwork, facilitating real-time status updates, and accelerating information exchange.
Silsal will initially be available to freight forwarders and their customers.
Whether you’re an insurance buyer, provider or simply looking to learn more about political risk and trade credit insurance as a risk management tool, this event is a unique opportunity to network with senior decision makers and discuss the key issues impacting the private insurance industry.
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