The deal aims to facilitate trade finance for African banks and their SME clients to allow them to participate in trade.
To improve access to trade finance, the African Development Bank Group has approved a USD 50 million Risk Participation Agreement (RPA) for Natixis, a leading French bank, in a bid to support African banks and their small and medium-sized enterprise (SME) clients to undertake more regional and international trade. The agreement is expected to facilitate the creation of a cumulative trade volume of USD 430 million over the next three years.
Natixis is the international corporate, investment, asset management, insurance, and financial services bank of Groupe BPCE, the second-largest banking group in France. Natixis supports its own corporate clients, financial institutions and institutional investors, as well as the individual, professional and SME clients of Groupe BPCE, throughout the world.
Trade Finance – Risk Participation Agreement to drive regional integration
This risk-sharing agreement is intended to meet the growing demand from African markets for trade finance in vital economic sectors such as agribusiness, energy, manufacturing, health, and services. Specifically, the agreement will support African commercial banks and SMEs by ensuring stable access to trade finance, an important driver of economic growth and regional integration. The agreement aligns with the African Development Bank’s High 5 strategic priorities, which include improving the quality of life for Africans and fostering economic growth on the continent.
Creating opportunities and jobs across Africa
The agreement is intended to catalyze greater intra-African trade flows over the next three years, helping more local banks and their SME clients to expand into new African countries, particularly those with low incomes. The aim is to facilitate their access to financing and help them unleash their potential. By diversifying production, the agreement is also expected to create jobs and additional tax revenues for several African countries.
Meeting growing demand for trade finance in vital sectors
The Risk Participation Agreement comes at a time when African banks are poorly capitalized due to the COVID-19 pandemic, which has impacted their ability to access lines of credit with international banks. This difficulty has been exacerbated by the tightening of regulatory standards for capital and compliance, leading international banks to reduce their commitments and the number of their correspondent banks in Africa. The agreement is designed to address these challenges and provide stable access to trade finance in vital economic sectors.
South Africa and the UAE recently undertook a series of meetings to discuss bolstering trade between the two states.