The three-year confirmation line will enable small and medium-sized private businesses to access letters of credit (LCs) with tenors of up to 24 months through local commercial banks. BNP Paribas will act as the confirming bank on the LCs and the IFC will guarantee half of the French bank’s exposure. The risk-sharing agreement between the two institutions, covering an initial amount of $30 million, is expected to be signed soon.
The IFC investment is part of the corporation’s strategy to encourage wider development of Algeria’s private sector. To this end, the IFC has previously invested in two commercial banks and a leasing company and taken a 20 per cent stake in Algiers Investment Partnership, the first full-service local investment bank (MEED 23:6:00). BNP Paribas’ wholly owned Algerian subsidiary, BNP Paribas El-Djazair, commenced operations at the start of this year.