EXIM Bank
EXIM Bank
Business Model Description
EXIM banks are government or semi-government agencies that ensure the safety and growth of a country’s foreign trade. Facilitating more accessible finances for foreign trade, trade rules, and conditions are some of the functionalities of an EXIM Bank.
EXIM Bank could facilitate the expansion of agricultural exports and streamline the procurement of critical production inputs. DFC is the only development bank in Belize and, with support from the private sector, can establish a trade finance subsidiary to support trade finance in Belize.
Expected Impact
Increased and alternative access to financing for entrepreneurs and small business owners
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Belize: Countrywide
Sector Classification
Financials
Development need
Up to 80% of trade is financed by credit or credit insurance, but coverage is not uniform. A lack of trade finance is a significant non-tariff barrier to trade, particularly (but not exclusively) in developing countries. Access to different forms of finance has continuously been expressed as a top need and priority in Belize.
Policy priority
Both the National Financial Inclusion Strategy (NFIS) and the Growth and Sustainable Development Strategy (GSDS) speak to the need for increased access to export financing.
Gender inequalities and marginalization issues
In 2019, it was estimated that only 66% of adults had a deposit account (bank or credit union), implying that 34% of adults were unbanked in Belize.
Investment opportunities introduction
The cost of financing for MSMEs is usually high. Often, MSMEs are unable to access the services of commercial banks due to high transaction costs and the requirements needed to obtain a loan from the bank. Due to the risk-averse nature of commercial banks. In addition, DFC is the only development bank in Belize.
Key bottlenecks introduction
Belize's financial system is underdeveloped, access to credit is challenging particularly for MSMEs
Corporate and Retail Banking
Development need
According to the World Bank’s Doing Business 2019, Belize ranks at 172th out of the 190 countries on the ease of getting credit for business purposes. Belize lacks a credit bureau which might explain Belize’s performance in this ranking. Per the 2014 Global Findex Survey, roughly 5.8 percent of adults reported borrowing for starting, operating, or expanding a farm or business.
Policy priority
Both the National Financial Inclusion Strategy (NFIS) and the Growth and Sustainable Development Strategy (GSDS) speak to the need for increased access to export financing.
Gender inequalities and marginalization issues
MSMEs remain underserved in Belize in comparison to larger and more established firms. MSMEs often lack access to finance and economies of scale, have low levels of penetration into global supply and value chains, and enjoy very little coordinated support from the public and private sectors.
Investment opportunities introduction
The cost of financing for MSMEs is usually high. Often, MSMEs are unable to access the services of commercial banks due to high transaction costs and the requirements needed to obtain a loan from the bank. Due to the risk-averse nature of commercial banks. In addition, DFC is the only development bank in Belize.
Key bottlenecks introduction
Belize's financial system is underdeveloped, access to credit is challenging particularly for MSMEs
Consumer Finance
Pipeline Opportunity
EXIM Bank
EXIM banks are government or semi-government agencies that ensure the safety and growth of a country’s foreign trade. Facilitating more accessible finances for foreign trade, trade rules, and conditions are some of the functionalities of an EXIM Bank.
EXIM Bank could facilitate the expansion of agricultural exports and streamline the procurement of critical production inputs. DFC is the only development bank in Belize and, with support from the private sector, can establish a trade finance subsidiary to support trade finance in Belize.
Business Case
Market Size and Environment
7,000 business establishments
As of 2016, there were 7,000 business establishments in Belize per the Statistical Institute of Belize Business Establishment Survey Report US $1.1B in private sector income in 2019
Indicative Return
> 25%
Estimation of margin is based on a review of the average return profile of the National Export Import (EXIM) Bank of Jamaica.
Investment Timeframe
Medium Term (5–10 years)
Given size of investment and the time required to establish a trade finance arm, expected return time frame is expected to be 5 years, estimation based on National Export Import Bank of Jamaica.
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - Limited Investor Interest
Impact Case
Sustainable Development Need
MSMEs remain underserved in Belize in comparison to larger and more established firms. MSMEs often lack access to finance and economies of scale, have low levels of penetration into global supply and value chains, and enjoy very little coordinated support from the public and private sectors.
Gender & Marginalisation
This can help in reducing inequalities to access to credit/financing. Women entrepreneurs would now have access to different financing opportunities.
Expected Development Outcome
Reduce the cost of capital and its obtaining and increase access to the financial market, particularly facilitating the expansion of agricultural exports as well as streamline the procurement of key inputs of production.
Gender & Marginalisation
Increased opportunities for female entrepreneurs and businesses in rural communities.
Primary SDGs addressed
8.1.1 Annual growth rate of real GDP per capita
8.2.1 Annual growth rate of real GDP per employed person
-1.6% annual growth rate of real GDP per capita (2019)
-2.7% annual growth rate of real GDP per employed person (2019)
5% annual growth rate of real GDP per capita
5% annual growth rate of real GDP per employed person
10.1.1 Growth rates of household expenditure or income per capita among the bottom 40 per cent of the population and the total population
-15% growth rate of gross national income per capita in Belize (2020)
5% growth rate of national income per capita
Impact Classification
Impact Thesis
Increased and alternative access to financing for entrepreneurs and small business owners
Enabling Environment
Policy Environment
Both the National Financial Inclusion Strategy and the Growth and Sustainable Development Strategy speak to the need for access to trade and export financing.
Financial Environment
There are five domestic banks in Belize with total assets of US$4.0BN. There is currently one development bank with assets of US$58.5MN, and eight credit unions with total assets of US$0.6BN.
Regulatory Environment
Applicable laws include the Domestic Banks and Financial Institutions Act, Exchange Control Act and the Money Laundering and Terrorism Prevention Act. This entity would require a license from the Central Bank of Belize to act as a financial institution and an authorized foreign exchange dealer.
Marketplace Participants
Government
Ministry of Finance: Responsible for national financial and investment policy
Government
Development Finance Corporation: The Development Finance Corporation (DFC) is the only development bank in Belize
Government
Central Bank of Belize (CBB): CBB is the competent regulatory authority with supervisory and oversight responsibility for the banking sector
Target Locations
Belize: Countrywide
References
- (1) National Financial Inclusion Strategy Drafting Committee (2019) Belize National Financial Inclusion Strategy 2019-2022 https://www.centralbank.org.bz/docs/default-source/4.8-national-financial-inclusion-strategy-(nfis)/belize-nfis-_final.pdf?sfvrsn=f1c68c35_2
- (2) Statistical Institute of Belize https://sib.org.bz/
- (3) Government of Belize. (2016). Belize Growth and Sustainable Development Strategy. Ministry of Economic Development. Retrieved https://observatorioplanificacion.cepal.org/sites/default/files/plan/files/BelizeGSDS.pdf
- ("4) Belize: Selected Issues Paper; (2018). IMF Country Report 18/328 Retrieved from. https://www.imf.org "
- (5) Building Trust through Public Private Partnerships (2019). Retrieved from https://thedocs.worldbank.org/en/doc/518001573152889777-0130022019/original/SessionIXEmikoHidaka.pdf
- (6) EXIM Bank Jamaica Annual Report (2019-2020). Retrieved from https://www.eximbankja.com/wp-content/uploads/2019/annual-reports/Annual%20Report%20Final%202020.10.pdf
- (7) The Handbook of International Trade and Finance, Retrieved from http://dspace.vnbrims.org:13000/xmlui/bitstream/handle/123456789/4613/The%20Handbook%20of%20International%20Trade%20and%20Finance%20The%20Complete%20Guide%20for%20International%20Sales%2C%20Finance%2C%20Shipping%20and%20Administration.pdf?sequence=1&isAllowed=y
- (8) Trade Finance Explained: An SME Guide for Importers and Exports (2020). Retrieved from https://www.tradefinanceglobal.com/wp-content/uploads/2020/10/SME-Trade-Finance-Guide-for-Importers-and-Exporters_TFG.pdf
- (9) World Trade Organization: Trade finance and SMEs, Retrieved from https://www.wto.org/english/res_e/booksp_e/tradefinsme_e.pdf