Multinational - COMESA Regional Trade and Project Finance Support Facility - Eastern and Southern African Trade and Development Bank (TDB)


Project Summary

Approval Date 17 Jul 2019
Sovereign / Non-Sovereign Non Sovereign
Sector Finance
DAC Sector Code 24030
Commitment U.A 146,347,531.48
Status Implementation

Project General Description

The proposed project concerns a US$ 200 million unfunded Risk Participation Agreement (RPA) to Eastern and Southern African Trade Development Bank (TDB). TDB was founded in 1985 as a multilateral, treaty-based financial institution with international immunities and privileges. It was conceived as the financing arm of the Preferential Trade Area for the Eastern and Southern African States, which was later transformed into Common Market for Eastern and Southern Africa (COMESA). TDB is a development finance institution (DFI), with whom the AfDB has an existing relationship spanning over 20 years. The facility is part of a US$ 300 million funding package to Eastern and Southern African Trade Development Bank (TDB), comprising US$ 50 million Trade Finance Line of Credit (TFLoC) and US$ 50 million long-term Line of Credit (LoC). The RPA will be for 3 years and the tenor of the underlying transactions will not exceed 2 years. The RPA component of this facility package provides a means to crowd in other private sector sources to provide financial support to countries where AfDB is constrained to intervene directly. The facility will be used to secure obligations arising from TF and trade related instruments originated within the COMESA member states such as letters of credit, bank guarantees, avalized obligations from documentary collections, bankers’ acceptance, pre and post import financing, factoring and forfeiture among others. The RPA facility will also provide a capital relief to TDB, which is crucial in cushioning its investment grade status and effectively enhance its profile as a confirming bank for African Issuing Banks and making its confirmation acceptable to international counter parties, allowing TDB to play a meaningful role in facilitating trade on the African continent. This is in line with the Bank’s strategy to support regional financial institutions to play a meaningful role in African development.

Project Objectives

The ultimate objective of the proposed financing package is to provide support to TDB with trade and project finance funding to on lend to projects in high impact sectors including infrastructure, energy, manufacturing, agribusiness and healthcare in the Common Market for Eastern and Southern Africa (COMESA) region. The overarching objective of this financing facility is to enhance the risk bearing capacity of the TDB, to be able to provide trade finance confirmation to issuing banks in its regional member countries, especially those in transition states.

Beneficiaries

It will benefit no less than 43 financial institutions operating in over 15 regional member countries, catalysing up to $2 billion worth of trade over the three-year period. The financing will also scale up intra-African trade, and foster regional integration. The trade finance funding will boost the import-export trade activities of local corporates and SMEs, while the project finance component will support regional infrastructure development, all crucial for the attainment of the Bank’s strategic objectives under the High 5s. It is expected that approximately 33% of the facilities will be used towards facilitating trade finance transactions in countries experiencing fragility.

Participating Organization

Funding
African Development Bank

Information

IATI identifier 46002-P-Z1-HAA-093
Last Update 19 Oct 2020

Export

Contact Details

Email private-sector@afdb.org

Geographic Location

Country Multinational