Approved on October 28, the Trade Finance Line of Credit will be provided to the Trade and Development Bank for lending to businesses and financial institutions across Africa.
The facility seeks to increase intra-African trade, strengthen regional integration and reduce the continent’s trade finance gap.
The revolving structure will allow the funding to support multiple transactions during the facility’s three-and-a-half-year term.
Beneficiaries will include financial institutions, corporations and small and medium-sized enterprises involved in imports and exports.
The AfDB said limited liquidity had constrained the growth of many of those businesses.
The facility will also finance imports of critical goods, including fertiliser, pharmaceuticals, refined petroleum products and essential food commodities in eligible Trade and Development Bank Member States. “This approval comes at a critical time as African economies face rising energy and fertiliser prices, trade and logistics disruptions, tighter global financial conditions and heightened geopolitical uncertainty,” AfDB Head of Trade Finance Lamin Drammeh said.
Drammeh said the Trade and Development Bank’s extensive African network and market knowledge would support the institutions’ shared ambition to expand regional trade.
The facility also supports implementation of the African Continental Free Trade Area by helping businesses obtain the working capital needed to trade across borders.
The financing forms part of AfDB’s Global Energy and Fertiliser Crisis Response Framework, which seeks to reduce the effects of rising energy and agricultural input costs on African economies.
Trade and Development Bank Group Executive Vice-President for the Finance and Risk Complex Joy Ntare said the transaction strengthened an existing strategic partnership covering equity, long-term financing, co-financing and risk-sharing. “The strength of our partnership lies in our shared ability to adapt and respond with timely solutions as new challenges emerge,” Ntare said.
Ntare added that the trade finance facility had been approved at a particularly important moment for African businesses facing tighter financing conditions and disrupted supply chains.
–AfDB/ChannelAfrica–
