The International Finance Corporation (IFC) announced on Tuesday February 24, the establishment of a 6 billion credit insurance mechanism of dollars, structured in partnership with a consortium of 19 insurers internationals.

The system is based on a sharing of credit risk: Insurers will cover some of the potential losses on loans granted by IFC to commercial banks and other institutions financial institutions financing SMEs. Thanks to this guarantee, the institution will be able to support up to $10 billion in new financing for small and medium-sized businesses in emerging markets, while optimizing the use of its own funds.

In emerging economies, SMEs represent more than 90% of businesses and around 70% of employment. However, they remain facing a structural financing deficit, linked to the cost of credit, collateral requirements and limited access to banking services.

By intervening at an early stage with partner banks, the SFI intends to remove these constraints. Its managing director, Makhtar Diop, highlights that this mechanism aims to facilitate the access of local businesses to resources needed for their growth.

For insurers, the transaction offers exposure to diversified portfolios, spread across several countries and sectors, while based on the structuring of a multilateral institution.

This is the largest fundraiser carried out by the IFC in the framework of a single agreement and one of the most extensive mechanisms credit insurance never structured by the institution. Among insurers involved include AIG, Allianz Trade, AXA XL, AXA XL, Chubb, Munich Re, Swiss Re and Tokio Marine.