eBusiness Weekly
HARARE – The African Development Bank (AfDB) said last week it had approved a $50 million facility by Commerzbank AG of Germany to support African banks that are aiming to expand their trade finance operations.
The facility will run for three years with a 50/50 risk sharing agreement, which is expected to support trade amounting up to $700 million in Africa over the period.
“The facility will help address trade finance market demand in key economic sectors such as agriculture and manufacturing,” the AfDB said.
“It will also foster financial sector development, regional integration and boost government revenue generation.”
The Côte d’Ivoire headquartered continental lender said most African banks were too small and as a result struggled to obtain credit lines to support African importers and exporters.
Bank financial sector development director, Stefan Nalletamby said Commerzbank was a strategic partner for implementing the AfDB development mandate.
“This intervention will improve market access by African issuing banks, corporates and SMEs,” she said.
Zimbabwean financial institutions for example have in the past two decades struggled to access credit finance to support meaningful economic activities due to isolation that the country has faced over political differences with the West.
The institutions also stand to benefit from the initiative.
Three years ago, the AfDB approved a similar risk participation facility with the support of the Japanese Sumitomo Mitsui Banking Corporation Europe Limited (SMBCE, to the tune of $100 million, aiding trade worth over $1, 2 billion. – New Ziana
