The facility is part of AfDB’s Trade Finance Programme and represents the first transaction between AfDB and Access Bank Zambia. The programme has supported more than $13.8 billion in trade volumes across 129 financial institutions since 2013.
The guarantee is expected to support trade flows of up to $240 million over a five-year period. The initiative is designed to help businesses participate more effectively in regional and international trade.
Small and medium enterprises account for about 70% of Zambia’s gross domestic product and approximately 88% of employment. However, access to trade finance remains limited, particularly for businesses requiring letters of credit to import goods or secure working capital.
AfDB estimates that Africa faces a trade finance gap of between $100 billion and $120 billion annually, with smaller businesses most affected. Raubil Olaniyi Durowoju, AfDB Country Manager for Zambia, said trade finance enables businesses to access inputs and expand operations, noting that the guarantee is intended to support participation in cross-border trade.
Under the arrangement, the guarantee will provide up to 100% risk cover to international confirming banks for trade finance instruments issued by Access Bank Zambia. The mechanism is expected to reduce collateral requirements and enable the bank to increase lending to local businesses.
The facility is expected to support imports of goods such as agricultural inputs, manufactured products and solar equipment, as well as exports to regional markets. Increased trade activity may also contribute to government revenue through taxes and duties.
The programme is also expected to incorporate a gender focused component. Women are represented in sectors such as agriculture and informal trade, where access to finance is often limited. The initiative may be supported by technical assistance under the Affirmative Finance Action for Women in Africa programme.
Iheanyi Nwogu, Managing Director of Access Bank Zambia, said the guarantee is expected to support the expansion of trade finance services and increase participation in cross-border trade.
–UN/ChannelAfrica–
