From Joseph Inokotong, Abuja
The African Development Bank (AfDB) has approved $50 million Multinational Trade Finance Risk Participation Agreement facility for Standard Chartered Bank.
The AfDB Group in a disclosure said the “agreement is expected to boost intra-Africa trade, promote regional integration, and contribute to the reduction of the trade finance gap in Africa, in line with implementation aspirations of the African Continental Free Trade Area (AfCFTA).”
Details of the deal, indicate that both parties will share the default risk on a portfolio of eligible trade transactions originated by African Issuing Banks and indemnified by Standard Chartered Bank.
Beneficiaries of this facility are issuing banks in Africa whose ability to grow their trade finance business has been constrained by inadequate trade confirmation lines from international banks, as well as small and medium enterprises (SMEs) and domestic firms who rely on these issuing banks to fulfil their trade finance commitments.
The Bank’s Director for Financial Sector Development, Stefan Nalletamby, stated: “We are excited about finalizing this facility with Standard Chartered Bank as it offers us the flexibility to use our strong AAA-rated risk-bearing capacity to increase access to trade finance and boost intro/extra- African trade on the continent, in support of the AfCFTA.
“This partnership is expected to catalyze more than $600 million in value of trade finance transactions across multi-sectors such as agriculture, manufacturing and energy over the next three years.”