The Board of Directors of the African Development Bank Group (AfDB) has approved a €70 million trade finance facility for Bank of Africa Morocco (BOA). This facility is set to promote regional trade across Africa, strengthen the capacity of African banks, and improve access to finance for small and medium-sized enterprises (SMEs) on the continent.
The trade finance facility consists of two key components: a €50 million risk participation agreement (RPA) and a €20 million trade finance line of credit (TFLOC). These funds will allow Bank of Africa to support local enterprises and help reduce trade finance gaps in Africa, especially in countries where BOA operates.
Supporting African Trade and SMEs
The facility will enable BOA to provide much-needed financing to African businesses, helping them access international markets by allowing BOA to provide more support to local banks on the continent in their international operations, as they increasingly face a decline in financing and confirmation lines with their foreign counterparts. This will particularly benefit SMEs, which often face difficulties obtaining adequate financing for trade. By providing additional liquidity to BOA, the facility will improve the bank’s ability to finance critical trade activities, including the import and export of goods and services.
In addition, the TFLOC will facilitate access to finance for Moroccan SMEs working in the key sectors of health, agriculture, the pharmaceutical and automotive industries, and transport.
“The African Development Bank, which is rated AAA by the largest rating agencies, is joining forces with the Bank of Africa Morocco to promote access to trade finance on the continent, in particular providing support for SMEs operating in transition States” said Ahmed Attout, director of the Bank’s Financial Sector Development Department.
This initiative aligns with the African Development Bank’s broader strategy to support trade finance, regional integration, and economic development across Africa.
“We are delighted with this first partnership with BOA, a leading player in Africa. Together, in Morocco and across the continent, we are strengthening financial inclusion for small and medium-sized enterprises (SMEs) involved in foreign trade, to help them to operate more widely,” added Achraf Hassan Tarsim, head of the African Development Bank’s Country Office in Morocco.
Enhancing Regional Integration
The African Development Bank’s support of BOA is expected to strengthen regional trade and enhance economic integration in Africa. BOA’s network, which spans 20 African countries, will play a pivotal role in facilitating cross-border trade and fostering stronger economic ties between African nations. According to AfDB, the deal should catalyze almost EUR 300 million in trade over a 3.5-year period.
The trade finance facility will help African businesses navigate the complexities of international trade, enabling them to compete more effectively in the global marketplace. It is also expected to support the objectives of the African Continental Free Trade Area (AfCFTA), which aims to boost intra-African trade by creating a single market for goods and services across the continent.
A Strategic Partnership
Bank of Africa, part of the BMCE Group, has been a key partner for the AfDB in advancing trade finance in Africa. With this facility, the bank will further strengthen its role in supporting African businesses and facilitating trade across the continent.
This latest funding initiative represents the African Development Bank’s continued commitment to addressing Africa’s trade finance challenges and supporting economic growth. By enhancing the availability of trade finance, the facility will contribute to job creation, economic diversification, and sustainable development across Africa.
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