The Board of Directors of the African Development Bank Group has approved a $200 million Trade Finance Line of Credit facility between the African Development Bank and Trade and Development Bank (TDB).
The facility 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).
Approved on 28 October, this facility will enable TDB to extend trade finance to clients across Africa. It is expected to catalyse more than $1 billion in trade transactions over its 3.5-year tenor due to the revolving nature of underlying transactions.
Beneficiaries include financial institutions, corporates and small and medium-sized enterprises engaged in import and export activities whose growth has been constrained by inadequate liquidity. The facility will also support the procurement of critical goods, including refined petroleum products, fertiliser, pharmaceuticals, and essential food commodities in TDB’s eligible member states under the Bank Group’s recently adopted Global Energy and Fertilizer Crisis Response Framework.
“This approval comes at a critical time as African economies face rising energy and fertiliser prices, trade and logistics disruptions, tighter global financial conditions and heightened geopolitical uncertainty,” said Lamin Drammeh, AfDB’s Head of Trade Finance. “We are pleased to work with Trade and Development Bank, a strong partner whose extensive knowledge and network across Africa support our shared ambition to advance the region’s trade.”
Joy Ntare, TDB Group Executive Vice President for the Finance and Risk Complex, expressed gratitude for the continued momentum of the strategic partnership between the two institutions, which also spans equity, risk-sharing, co-financing and long-term financing. “The strength of our partnership lies in our shared ability to adapt and respond with timely solutions as new challenges emerge, as was the case with this trade finance transaction which comes at a particularly fitting moment,” she said.
The African Development Bank Group’s Trade Finance Line of Credit (TFLoC) provides short-term loans to African financial institutions to support their trade finance operations. The Bank targets institutions focused on SMEs and trade finance, with satisfactory corporate governance and risk management systems. TFLoC funding enables these institutions to provide credit to SMEs engaged in imports or exports through facilities such as pre- and post-shipment finance, factoring and import loans. The facility has a tenor of up to 3.5 years, during which funds can be rolled over several times.