In order to support the development of trade in emerging countries, Proparco launched a Trade Finance transaction guarantee programme in 2017. By guaranteeing the trade finance instruments of partner banks with their correspondent banks, Proparco secures trade transactions and facilitates the development of commercial relations between importers and exporters. It allows Proparco to operate in jurisdictions who have high needs for imported products but suffer from lack of financing due to high country risks and severe collateral constraints applied by confirming banks. As such, Iraq is particularly concerned by these issues.
This two-year facility by Proparco will enable National Bank of Iraq to issue trade finance instruments for an amount up to $10 million, with an AFD Group guarantee ranging from 20% to 100%.
This project will have significant impact as it will increase the financing capacity of the National Bank of Iraq, with Proparco providing strong support to local importers, in a country severely affected by the lack of financial investors, ultimately supporting investments, job creation and economic growth.
The National Bank of Iraq (NBI) was established in 1995 as a public shareholding company. In 2005, Capital Bank of Jordan (CBJ) acquired approximately 62% of the bank’s equity, becoming its single largest shareholder. NBI operates through its headquarters in Baghdad and its network of 18 branches spread across the country’s main cities and employs more than 400 persons. Iraq’s importing needs are strong and NBI contributes to financing all sectors of the economy. With the support of Capital Bank, which facilitates access to the dollar, NBI is an important player in the local market.
This new transaction in Iraq is fully in line with Proparco's 2020-2022 strategy, which aims to take proactive action in fragile countries where development finance institutions do little despite the fact that, according to the OECD, 80% of world poverty will be concentrated there by 2030. This project, one of the 60 that Proparco aims to support by 2022 in fragile countries, will be on an intrinsically low risk activity but strategic for the country.
Speaking about the agreement, National Bank of Iraq Chairman Bassem Khalil Al-Salem said, “we are pleased to receive this trade finance guarantee from Proparco. Through this cooperation, NBI will now be better equipped to mobilize private sector investments as a means of supporting Iraq’s economic recovery. NBI is the first bank in the country to receive a trade finance guarantee from Proparco, which is a testament to the strength of our partnership and will allow us to support bankable projects throughout the country.”