What IFC and Santander’s supply chain finance deal could mean for emerging market suppliers

The World Bank Group’s private-sector arm, the International Finance Corporation (IFC), and Banco Santander launched a supply chain finance risk-sharing facility on 23 June, aiming to expand working capital access for suppliers across emerging markets.

The facility is designed to support supply chain finance programmes originated globally by Santander. IFC said it will help suppliers that often face limited borrowing options access finance based on the credit profile of their buyers rather than their own balance sheets.

That structure is central to why the deal matters. In many emerging markets, smaller suppliers struggle to obtain affordable working capital because they lack long credit histories, sufficient collateral, or access to international banking relationships. Supply chain finance can help bridge that gap by allowing suppliers to receive early payment once invoices have been approved by stronger corporate buyers.

The IFC-Santander facility is expected to support US$1.5bn in supply chain finance transactions over the next three years. That scale makes the transaction more than a bilateral banking partnership. It points to a wider shift in how development finance institutions are using risk-sharing structures to mobilise private bank balance sheets for trade and working capital finance.

For Santander, the agreement provides risk mitigation and emerging market support for supply chain finance activity across its global network. For IFC, it extends the World Bank Group’s strategy of using partnerships with commercial banks to address trade finance and working capital gaps in markets where access to liquidity remains uneven.

The timing is important. Higher interest rates, trade volatility and tighter credit conditions have increased pressure on suppliers, particularly SMEs linked to cross-border supply chains. Even when large buyers remain creditworthy, suppliers often face long payment cycles and limited financing options. By anchoring finance to buyer credit quality, the facility could help unlock liquidity earlier in the transaction cycle.

It also reflects the growing importance of supply chain finance within development finance policy. Traditional trade finance support has often focused on letters of credit, guarantees and bank-to-bank risk mitigation. The IFC-Santander facility shows greater emphasis on open-account trade, approved payables and supplier liquidity, areas where many smaller businesses experience the most immediate working capital pressure.

The facility may also influence how other global banks approach emerging market supply chain finance. If risk-sharing with a multilateral development institution can improve capital efficiency, reduce exposure concerns and support more lending to smaller suppliers, similar structures could become more common.

There are still limits. Supply chain finance depends on strong buyer participation, reliable invoice approval processes, clear legal documentation and robust controls against fraud or duplicate financing. It also works best when suppliers are connected to formal buyer-led programmes. Many SMEs outside major corporate supply chains may still struggle to access finance.

Even so, the IFC-Santander agreement is a useful signal. It suggests that supply chain finance is increasingly being treated not only as a treasury product for large buyers, but as a development finance tool capable of improving liquidity across supplier ecosystems.

For emerging market suppliers, the key benefit is potentially faster and cheaper access to working capital. For buyers, the facility could support more resilient supply chains by reducing supplier liquidity stress. For banks, it demonstrates how public-private risk sharing can expand supply chain finance without leaving commercial lenders to carry all the emerging market exposure alone.

The deal therefore sits at the intersection of trade finance, SME finance and development finance. Its impact will depend on how widely Santander is able to deploy the facility and whether it reaches suppliers that genuinely face financing constraints. But the direction of travel is clear: supply chain finance is becoming a more important tool in efforts to close working capital gaps across emerging markets.