MICROCAPITAL BRIEF: CDC Group, Habib Bank Limited (HBL) Agree to $50m Risk-sharing Facility to Boost Trade, Supply Chains in South Asia, Africa

CDC Group, a development finance institution backed by the UK government, recently announced a risk-sharing facility valued at USD 50 million in partnership with Habib Bank Limited (HBL) UK, a subsidiary of Pakistan-based HBL. The facility aims to boost HBL UK’s ability to lend to financial institutions and businesses whose supply chains have been disrupted by the COVID-19 pandemic. In particular, the focus is on supporting imports of “food and agricultural commodities, metals, machinery and other essential resources” to Bangladesh, Pakistan and Sri Lanka. Meanwhile, a portion of the funds is to be leveraged in Africa to increase the liquidity of local banks to boost their lending and access to foreign exchange. In addition to the countries named above, HBL is active in Bahrain, Belgium, China, Lebanon, Maldives, Mauritius, Oman, Singapore, Switzerland, Turkey and the United Arab Emirates, and it has affiliates in Burundi, Kenya, Kyrgyzstan, Nepal, Tanzania and Uganda.

CDC’s Head of Trade and Supply Chain Finance, Admir Imami, said, “CDC is committed to focusing its capital toward helping to mitigate the impact of the pandemic throughout Asia and Africa’s markets, even as COVID-19 exacerbates existing pressures on trade finance. We are pleased that our partnership with HBL UK will help address the financing gap to local businesses, sustain supply chain and trade flows, and ensure communities and businesses can recover and grow.”

Established in 1961, HBL UK provides retail, trade, payment and wealth management services. In 2020, it reported total assets of GBP 549 million (USD 762 million).

Founded in 1940, HBL operates 1,700 branches across 15 countries, serving approximately 20 million active customers. For 2020, it reported total assets of PKR 3.85 trillion (USD 23.4 billion), return on assets of 0.9 percent and return on equity of 14.4 percent.

Established in 1948 as the Colonial Development Corporation, the mission of CDC is to foster growth in “sustainable” businesses to raise living standards in developing countries. It deploys debt, equity and “fund-of-funds” strategies in Africa and South Asia. As of 2020, CDC’s investment portfolio was valued at USD 6.2 billion, and it reported issuing new commitments worth GBP 1.75 billion (USD 2.47 billion) during that year.

By Sophie Fiala, Research Associate

Sources and Additional Resources

CDC Group press release
https://www.cdcgroup.com/en/news-insight/news/cdc-group-agrees-50-million-trade-finance-risk-sharing-facility-with-hbl-bank-uk-hbl-uk/?fl=true

CDC Group homepage
https://www.cdcgroup.com/

HBL UK homepage
https://hblbankuk.com/

HBL UK 2020 report
https://hblbankuk.com/wp-content/uploads/2021/04/Annual-Report-2020-1.pdf

HBL homepage
https://www.hbl.com/

HBL 2020 report
https://www.hbl.com/investor-relations/annual-accounts

Previous MicroCapital news on CDC Group
https://www.microcapital.org/microcapital-brief-cdc-updates-environmental-social-governance-esg-toolkit-for-financial-services-providers-adding-climate-component/

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