The Trade Finance Transaction Guarantee Facility will support eligible transactions involving small and medium-sized enterprises and local companies in Kenya.

Under the agreement, the AfDB will provide guarantees covering up to 100% of the non-payment risk faced by confirming banks.

The guarantees will apply to eligible letters of credit and similar trade-finance instruments issued by Equity Bank Kenya.

Reducing the risk carried by confirming banks is expected to increase the financing available for transactions originating from Equity Bank Kenya.

The facility will help Kenyan businesses pay for eligible imports, secure productive inputs and participate more effectively in regional and international trade.

“Africa does not suffer from a shortage of enterprise,” AfDB East Africa Director-General Alex Mubiru said during the signing ceremony held in Nairobi on October 1.

“Too often, Africa suffers from a shortage of financing that allows enterprises to trade.”

Mubiru said combining AfDB’s ability to carry risk with Equity Bank Kenya’s local reach and market knowledge could expand opportunities for businesses. “By combining the AfDB’s risk-bearing capacity with Equity Bank’s local reach and knowledge, this facility can turn shared risk into expanded opportunity for Kenyan businesses,” Mubiru said.

The partnership is also expected to support trade among African countries and advance implementation of the African Continental Free Trade Area.

Trade-finance guarantees enable local banks to complete cross-border transactions by providing protection to international financial institutions against possible non-payment.

Small and medium-sized enterprises are particularly affected by limited access to trade finance because of collateral requirements, perceived risk and the cost of cross-border transactions.

Africa’s unmet trade-finance demand was estimated at as much as $92 billion in 2024, with smaller businesses among the most severely affected.

AfDB uses transaction guarantees and funded facilities to help African financial institutions increase financing for importers and exporters.

The agreement with Equity Bank Kenya is expected to improve access to essential imports while helping local businesses expand production, enter new markets and strengthen regional value chains.

–AfDB/ChannelAfrica–