Trade, agricultural development and medium scale business enterprise growth, and by implication the economic development of developing countries, have been hampered by inadequate credit financing. Banks in these countries have refrained from extending credit to these important sectors because of the perceived risks and their limited capacity to mitigate such risks. Particularly for commodity finance facilities, there is an established need ACE has identified, for financiers to improve on capacities for structured financing, to rely less on fixed pledged assets and also consider the underlying liquid/current assets as collateral; plus (necessarily), the underlying ability of the business to perform. The borrowers and the lender have a mutually beneficial position in utilizing structured and self-liquidating financing arrangements. For illustration of this position consider the following sample concerns for both the financier and his client:

• How knowledgeable is in-house staffs in Commodity finance structuring and/or the Trade finance infrastructure set up?
  
  
• What protection, control and monitoring measures are in place for the underlying trade transaction being financed, so as to enable effective and efficient completion of the trade cycle, from the point at which funds are disbursed to the point at which reimbursement is made to the Bank.

What coverage is available to ensure that alternative off-takers or sales contracts are in place and to ensure the Bank will be reimbursed in case the initial transaction falls through?

• Is it possible to have hedging mechanisms to mitigate price and other risk thereby increasing the collateral value afforded to Financiers?
  
  
• Is there any partnership, competition or similar situation from the business environment that has not been utilized to in-house operational performance results? How sound is 'our' Business development initiative?

Responses to these and similar concerns may evidence an identifiable gap between Traders and financiers' needs in the Commodity finance that the ACE training package seeks to address.

Strategic Program Objective

• To ensure the capacity of the banks to provide credit financing for expansion of trade, agricultural development and medium scale business through structured financing backed by risk mitigation and collateral management instruments drawn from ACE experience in these markets.

Operational Objectives

• To provide training to middle level and senior staff of commercial and development banks in: structured commodity trade, finance, agricultural credit management, business appraisal, and on-going monitoring and evaluation of project performance.
  
  
• To provide exposure to legal and policy framework backing structured commodity trade finance (e.g. warehousing and utilization of warehouse receipts/warrants) as one of the bases for effective and viable trade facility disbursements.
  
  
• To provide training to middle level and senior staff of commercial and development banks in: structured commodity trade, finance, agricultural credit management, business appraisal, and on-going monitoring and evaluation of project performance.

To provide exposure to legal and policy framework backing structured commodity trade finance (e.g. warehousing and utilization of warehouse receipts/warrants) as one of the bases for effective and viable trade facility disbursements.