Trade finance provides ‘systemic liquidity’ to emerging-market businesses in COVID crisis




Impact Alpha article by Yasemin Saltuk Lamy & Diana Kolar


In a world where innovation is revered, it can be easy to forget the value of tried and tested tools. When Covid-19 revealed itself as a global pandemic, CDC turned to one of the oldest forms of international finance to support financial stability with systemic liquidity: Trade Finance. This age-old instrument has not attracted many modern impact investors, yet trade finance, and other forms of invoice or inventory-backed working capital financing, is exactly the type of support businesses need to maintain operations and jobs without jeopardizing financial health by taking on leverage or diluting ownership during a crisis.


Development Finance Institutions have announced more than $12 billion in trade-related COVID-response initiatives as of early July. For impact investors in need of low