The Asian Development
Bank (ADB) is creating a Supply Chain Finance Programme (SCFP) that will bring
over $1 billion to help cash-strapped small and medium-sized enterprises in
Asia and the Pacific access capital that can help them grow.
The ADB is supplying up
to $200 million for the SCFP, which will revolve at least twice a year because
of the short-term maturities involved in supply chains. Furthermore, the $200
million is estimated to attract an additional $300 million, at least, in
private sector investment through the SCFP.
“Many small companies
currently face lags of 30 to 180 days between the time they ship goods and when
payments are received, leaving them short of cash flow that forces some to slow
production or delay the processing of other contracts,” said director general
of ADB’s Private Sector Operations Department Philip Erquiaga. “The programme
will unlock financial resources caught in the supply chain and thereby improve
companies’ access to affordable working capital that helps support jobs and
incomes.”
The ongoing global
economic downturn has exacerbated the challenges facing many companies, with
buyers putting greater pressure on suppliers to extend their payment terms, and
on distributors to shorten their payment terms. The SCFP will improve
suppliers’ and distributors’ access to cash flow within a supply chain, meaning
that they will be able to expand operations and employ more people.
ADB, an AAA-rated
multilateral development bank, has made substantial progress in supporting
trade through the Trade Finance Programme (TFP) which has an annual turnover of
approximately $4 billion without any defaults and which focuses support for
trade in the poorest developing Asian countries. The programme is limited to
assuming bank risk for cross-border transactions.
The new SCFP will
complement the TFP by assuming nonbank commercial risk for both cross-border
and domestic transactions within a supply chain. It will provide
affordable finance to many small and medium-sized enterprises, some of which
may have traditionally not been considered bankable. 
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