African Development Bank Group Board of Directors (https://www.AfDB.org/) has approved a $175 million Trade Finance Funded Risk Participation Agreement facility between the African Development Bank and the Trade & Development Bank (TDB). The agreement is expected to increase intra-African trade, promote regional integration, and contribute to reducing the trade finance gap in Africa.
The Bank will provide up to 50% liquidity (another 50% will be matched against TDB), to Issuing Banks on a risk-sharing basis, to support trading activities of local companies and SMEs in the Common Market for East and South Africa (COMESA) member countries. Together, the two institutions will provide a ticket size of $350 million to support trade transactions. This is a strategic effort by the African Development Bank to support the African Continental Free Trade Area agenda to reshape markets and economies across the region by helping to increase output in the services, trade, manufacturing and natural resources sectors.
Speaking immediately after Board approval, the Bank’s Director of Financial Sector Development, Stefan Nalletamby, stated: “We are very pleased to finalize this facility with TDB which will assist TDB in increasing its trade finance offerings across the COMESA region and help fill the growing trade finance gap. In particular, it will enable TDB to play a vital role in providing the necessary funds for the post-COVID-19 economic recovery of its member countries. This partnership is expected to catalyze more than $2.1 billion worth of trade finance transactions across sectors such as agriculture, manufacturing and energy over the next 3 years.”
The African Development Bank estimates the annual trade finance gap for Africa to be around $81 billion. Compared to multinational corporations and large local firms, SMEs and other domestic firms have greater difficulty in accessing trade finance.
The Bank’s Director General for East Africa region, Nwabufo Nnenna said, “The emergence of COVID-19 coupled with stringent regulatory/capital requirements and enforcement of KYC compliance, has seen many global banks reduce their correspondent banking relationships in Africa, while some left the market overall. Therefore, there is an urgent need for focused financing to revive African trade, particularly in low-income and transitional countries, which require more participation from institutions such as the African Development Bank”.
Distributed by the APO Group on behalf of the African Development Bank Group (AfDB).
Department of Communication and External Relations
African Development Bank
About the African Development Bank Group:
The African Development Bank Group is Africa’s premier development financial institution. It consists of three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigerian Trust Fund (NTF). On the ground in 41 African countries with external offices in Japan, the Bank contributes to the economic development and social progress of its 54 regional member states. For more information: www.AfDB.org
Founded in 1985, the East and South Africa Trade and Development Bank (TDB) is a multilateral, treaty-based investment-level development finance institution with 41 sovereign and institutional shareholders and USD 7.2 billion in assets. TDB serves 22 economies in its region, with mandates to finance and promote trade, regional economic integration, and sustainable development. TDB is part of the TDB Group, which also consists of TDF (Trade and Development Fund), ESATF (East and South Africa Trade Fund), TCI (TDB Captive Insurance), and the TDB Academy. www.TDBgroup.org
This Press Release has been issued by APO. Content is not monitored by the Business Africa editorial team and is not content that has been vetted or validated by our editorial team, evidence readers or fact checkers. The publisher is fully responsible for the contents of this announcement.
The African Development Bank approves a $175 million Regional Trade Finance Funded Risk Participation Agreement facility for the East and South African Trade & Development Bank
Source link The African Development Bank approves a $175 million Regional Trade Finance Funded Risk Participation Agreement facility for the East and South African Trade & Development Bank