The African Development Bank (AfDB) has approved a trade finance package totalling $280 million for the African Export-Import Bank (Afreximbank) to enable Afreximbank expand its risk bearing capacity and provide medium-term funds for financing trade transactions and projects across Africa.
The AfDB announced in Tunis that the package, approved by its Board of Directors yesterday, consisted of a $30 million equity investment, a $150 million line of credit and a $100 million unfunded risk participation agreement.
“The facility will enable Afreximbank to increase its visibility as a confirming bank for trade transactions originated by African issuing banks,” said the AfDB. “The additional equity investment also demonstrates AfDB’s continued strong support for Afreximbank as a key player in Africa’s trade finance market”.
Welcoming the approval of the package, Afreximbank President Jean-Louis Ekra said, “This unprecedented trade finance package adds significant value to the Afreximbank brand, both in terms of giving a substantial boost to our equity raising effort and in supporting our capacity to effectively deliver on the Bank’s trade development mandate in the context of Africa’s rapidly developing economic landscape.”
“It demonstrates in a clear manner what can be achieved when Africa’s leading financial institutions come together for the common purpose of advancing the continent,” added Mr. Ekra.
The facility is expected to boost intra-African trade and promote regional integration as well as contribute to the reduction of the trade gap in Africa. It will also contribute to macroeconomic resilience in at least 30 countries and provide financing to more than 100 financial institutions and corporates while also supporting at least $2.2 billion worth of trade in Africa over a 4-year period, thereby helping to deepen the financial sector and promote private sector development.
With the AfDB’s ‘AAA’ rating, the facility will enhance Afreximbank’s trade finance confirmation capabilities and support it to provide appropriate trade finance to local banks and corporates. It also demonstrates the AfDB’s appetite for Africa risk.
AfDB is Africa’s premier development finance institution and is on ground in 34 African countries, with an external office in Japan, contributing to the economic development and social progress of its 53 member states.
Manal Mounir Hendy