| Approval Date | 29 Mar 2017 |
| Signature Date | 21 Jul 2017 |
| Sovereign / Non-Sovereign | Non Sovereign |
| Sector | Finance |
| DAC Sector Code | 24030 |
| Commitment | U.A 219,243,755.21 |
| Status | Implementation |
The project consists in granting: (i) a US $ 300 million trade finance credit line (CF LDC); and (ii) a risk-sharing agreement of US $ 150 million to finance the implementation of the medium-term strategy of the African Export-Import Bank (Afreximbank). The strategy focuses on the following main pillars: intra-African trade, industrialization and export development, and trade finance globally. The CF LDC will have a 4-year term, while the risk-sharing agreement should have a maturity of 3 years. Under the risk-sharing agreement, the Bank will guarantee up to 50% of the credit risk on a portfolio of trade finance transactions initiated by African issuing banks. Afreximbank will cover the risks for an amount greater than or equal to the Bank's contribution. The proposed facility will help address the severe shortage of trade finance in RMCs, due in part to falling commodity prices and shrinking foreign exchange reserves. It will strengthen regional integration and support intra-African trade.
The main objective of this mechanism is to strengthen Afreximbank's reputation as a new confirmation bank, and to increase its capacity to provide critical financial support to financial institutions (FIs) and African businesses. The ultimate objective is to strengthen Afreximbank's role in promoting intra-African trade and regional integration, in line with its mission and fifth strategic plan, which include: (i) improvement of agricultural and industrial production (industrialization and improved agricultural production); (ii) improvement of commercial infrastructure; (iii) the development of intra-African trade and regional integration; and (iv) job creation and poverty reduction.
This new mechanism is expected to benefit many local companies and SMEs, through more than 30 financial institutions in at least 15 RMCs, including the least industrialized countries and fragile states. It will support sectors such as agriculture, manufacturing and infrastructure.
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Funding
African Development Bank
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| IATI identifier | 46002-P-Z1-HAA-085 |
| Last Update | 31 Oct 2019 |
| private-sector@afdb.org |
| Country | Multinational |