Banks sign partnership agreement to strengthen trade finance in Africa
RABAT, December 7, 2024 — The African Development Bank [AfDB], and the Eastern and Southern African Trade and Development Bank [TDB] have signed an agreement for a US$ 150 million Trade Finance Unfunded Risk Participation Agreement [RPA] facility. The agreement was concluded on the sidelines of the African Investment Forum in Rabat, Morocco.
The RPA aims at bolstering intra-Africa trade, promoting regional integration, and contributing to the reduction of the trade finance gap in Africa. The facility will provide guarantee cover of 50 percent and up to 75 percent for transactions in Low-Income Countries [LICs] and transition states. The facility is expected to support about US$ 1.8 billion of trade over the next three years.
TDB Group offers bespoke trade finance solutions such as import and export financing, structured commodity finance, pre- and post-shipment finance, issuance of LCs, guarantees and bonds, and supplier-focused working capital solutions. Beneficiaries of this facility are local and regional Issuing Banks in TDB Group’s member states, and African SMEs who rely on these Issuing Banks to fulfil their trade finance commitments.
“TDB Group is delighted to strengthen its strategic partnership with the African Development Bank Group through tailored risk-sharing facilities aimed at scaling up trade finance. This crucial support will help bridge the significant gaps in trade finance access as major international banks continue retreating from the continent,” said Wegoki Mugeni, TDB Group Chief Operating Officer in Nairobi.
The African Development Bank Director of the Financial Sector Development Department Attout Ahmed added: “We are delighted to work with TDB Group, a strong partner with extensive knowledge and network in Africa, on a shared ambition to support the region’s trade.
“Supporting Trade in Africa is a key priority at the African Development Bank. Trade finance is an important driver of economic growth and is critical for cross-border trade particularly in emerging markets.”
TDB Group’s focus on critical economic sectors such as agriculture, infrastructure, energy, construction, and manufacturing align with the African Development Bank’s Ten-Year Strategy to promote trade and economic growth, and three of its High-5 strategic priorities of “feed Africa;” “Industrialise Africa” and “integrate Africa.”
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