(DFID) New financial boost for businesses in developing countries from the UK Government

Businesses in developing countries are struggling to survive due to the economic downturn and need urgent financial support, said Secretary of State for International Development Douglas Alexander.

At the London Summit, world leaders are working to stabilise financial markets and help families and businesses across the world to get through the recession.

And the UK Government today (THURS) intends to take practical action to support firms across the globe, helping stimulate trade in developing countries and ensuring sustainable growth.

This will be done through the World Bank's new initiative called the Global Trade Liquidity Programme (GTLP) set up to support small and medium businesses by helping address the trade finance shortage in developing countries through international banks.

The UK Government, through its development finance institution CDC, intends to make a contribution of up to £300m to the GTLP.

Secretary of State for International Development Douglas Alexander said: "Private sector businesses are an essential engine of growth and play a vital role in stimulating global trade, which provides a lifeline to millions of people across the globe.

"People in developing countries have been disproportionately hard-hit by the economic crisis. This money will help firms keep going during the difficult climate and help to protect and create jobs.

"This is not an initiative to help make commercial banks richer.

Participating banks must all commit to using the money to support trade in developing countries. In the first phase, this will include Kenya, Angola, Ghana, Nigeria, Mauritius, Malawi, Mozambique, Seychelles and Zambia." The proposed sum alone could help fund beween £2bn and £3bn of trade over the next two years, helping small and medium firms to import and export products. The UK money will be invested in the GTLP on a loan basis.

The shortage in trade finance, due to the current economic crisis, is a significant threat to world trade - already projected to decline by about nine per cent this year. The World Trade Organisation has suggested there could be a global shortfall of between $100bn and $300bn.