Commonwealth countries urged to pledge at least $20 million for new trade finance facility

Commonwealth leaders will be urged to pledge at least $20 million for a new trade finance facility to aid trade emanating from small states.

The facility was launched by Prime Minister Joseph Muscat and Commonwealth Secretary General Kamalesh Sharma. Malta - along with India, Sri Lanka and the Mauritius - is one of the anchor countries.

The idea behind the trade facility is to provide 20% of the guarantee for projects proposed by small enterprises, which are usually turned down by banks.

By way of example, if a project is worth a €1,000,000, the facility would cover €200,000, enabling the bank to cover the deal.

Addressing a joint press conference, Muscat and Sharma said that the realities of small states were many times overlooked by the international community, where the critical mass to attract potential investment and translate that into action was lacking.

“A trade finance facility would enable and give the necessary guarantees to attract the interest of financial institutions,” the Maltese Prime Minister said.

It is not yet known how much each country, Malta included, will be pledging. But Malta, along with India, Sri Lanka and Mauritius, have already voiced their support.

It was in fact a working group from these four countries that came up with the core idea.

The Commonwealth wants the trade facility to be run and driven by the private sector, in liaison with financial institutions. 

The Maltese government, along with the Commonwealth secretariat, yesterday announced a separate initiative which will see the setting up of a ‘Centre of Excellence’ in Malta to serve as a focal point for assistance to 31 Commonwealth small states and jurisdictions.

The centre will be run by Malta in partnership with the Commonwealth secretariat, hoping to attract at least projects worth €100,000 every year.

“We are the enablers and facilitators … it’s going to be a hub of global activity with multiple activists,” Sharma said.

The centre of excellence, he added, would be demand driven attracting women entrepreneurs, interest in blue economy and capacity building.