| Project Detail |
On March 21st, 2024, the Multilateral Investment Guarantee Agency (MIGA) signed a Trade Finance Guarantee (TFG) amounting to EUR300 million to Standard Chartered Bank, covering a trade loan against the risk of non-payment by the Government of Senegal (GoS).
The project aims to support GoS in facilitating trade-related activities that enhance the country’s food security and agricultural programs. In support of the national strategy, the MIGA-covered facility will provide financing for agricultural inputs such as seeds, fertilizers, and equipment, as well as agricultural outputs such as peanuts, rice, and horticulture products. This initiative is expected to contribute to the stability of the overall market by easing the financial challenges local intermediaries face in the agricultural sector.
Environmental Categorization
The MIGA-covered facility will support short-term trade payments to suppliers of Senegal. These transactions pose minimal environmental and social (E&S) risks and impacts and as such, the overall portfolio risk is considered low. The project has thus been categorized as ‘FI-3’ under MIGA’s Policy on Environmental and Social Sustainability (2013). The applicable E&S requirement for this project is the MIGA Exclusion List. GoS will be responsible for screening the transactions. GoS will also be required to comply with the labor standards set forth in MIGA Performance Standard 2: Labor and Working Conditions.
Development Impact
The Project will help Senegal to unlock new liquidity to support critical trade activities in the country, particularly in the agribusiness sector. With the MIGA-supported facility, Senegal will be able to access trade finance at lower annual borrowing costs amidst market liquidity constraints and rising interest rates. Agriculture being a pivotal pillar of the economic activity of Senegal, increasing agricultural productivity is key to achieving more inclusive growth, as well as to national and regional food security. Enhancing access to trade finance in the agribusiness sector, this Project will support the implementation of the Government of Senegal’s Plan Senegal Emergent 2035, which identifies the promotion of agriculture among the sector drivers for growth.
The Project is aligned with the priorities set under the MIGA’s FY24-26 Strategy and Business Outlook, as it will support the expansion of trade finance (a new product innovation for MIGA) and help expand MIGA’s footprint in IDA countries. The Project is also consistent with MIGA’s crisis response strategy, of providing countercyclical support in times of crisis. |
