AfDB and TDB Group unite to boost trade finance across critical economic sectors.
The African Development Bank (AfDB) and the Trade and Development Bank Group (TDB Group) have announced a $150 million trade finance facility designed to address significant gaps in trade financing across Africa. This partnership comes at a critical time, as major international banks continue to retreat from the continent, leaving local businesses and industries underserved.
Announcing the Unfunded Risk Participation Agreement (RPA), Wegoki Mugeni, Chief Operating Officer in Nairobi for TDB Group, remarked on the importance of the collaboration: “TDB Group is delighted to strengthen its strategic partnership with the African Development Bank Group through tailored risk-sharing facilities aimed at scaling up trade finance. This crucial support will help bridge the significant gaps in trade finance access as major international banks continue retreating from the continent.”
The $150m RPA facility is expected to provide guarantee cover of 50% and up to 75% for transactions in low-income countries (LICs) and transition states.
A Shared Vision for Africa’s Economic Growth
The facility aligns with both organizations’ commitment to fostering economic growth across Africa through improved trade finance. The AfDB and TDB Group are leveraging their respective expertise to support key sectors, including agriculture, energy, construction, manufacturing, and infrastructure.
“We are delighted to work with TDB Group, a strong partner with extensive knowledge and network in Africa, on a shared ambition to support the region’s trade,” stated Attout Ahmed, Director of the Financial Sector Development Department at AfDB. “Supporting trade in Africa is a key priority at the African Development Bank. Trade finance is an important driver of economic growth and is critical for cross-border trade, particularly in emerging markets.”
Strategic Alignment with AfDB’s High-5 Priorities
The partnership supports three of AfDB’s High-5 priorities: “Feed Africa,” “Industrialize Africa,” and “Integrate Africa.” By focusing on these priorities, the initiative aims to promote sustainable economic development and enhance regional trade within the framework of the African Continental Free Trade Agreement (AfCFTA).
Ahmed further emphasized, “TDB Group’s focus on critical economic sectors such as agriculture, infrastructure, energy, construction, and manufacturing align with the African Development Bank’s Ten-Year Strategy to promote trade and economic growth.”
Addressing Africa’s Trade Finance Deficit
Africa’s trade finance gap is estimated at $81 billion annually, with small and medium-sized enterprises (SMEs) and local banks bearing the brunt of the shortfall. The retreat of international banks has further exacerbated the issue, making partnerships like the one between AfDB and TDB Group critical for fostering resilience and growth in Africa’s trade ecosystem. The facility is expected to support around US$1.8bn of trade over the next three years.
By creating tailored solutions, the $150 million facility aims to empower businesses and enable cross-border trade. This initiative not only provides essential liquidity but also builds a robust foundation for long-term economic integration and sustainability in Africa.
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