The African Development Bank (AfDB) board of directors has approved a $450 million trade finance package for the African Export–Import Bank (Afreximbank), to boost its risk bearing capacity.

A statement made available to newsmen showed that the facility approved on 29 March, consists of a three-year $150 million unfunded risk participation agreement (guarantees) and a four-year $300 million trade finance line of credit.

This composite facility will help to expand Afreximbank’s risk bearing capacity for the confirmation of letters of credit and to support more trade through the provision of increased liquidity to local financial institutions and corporate organizations in Africa.

The project is aligned with AfDB’s High 5 priority goals, which are, to light up and power Africa, feed Africa and industrialize Africa.

The goals which also include , to  integrate Africa and to improve the quality of life for the people of Africa., is expected to aid intra-Africa trade, promote regional integration, and contribute to the reduction of the trade finance gap in Africa.

Given Afreximbank’s commitment to helping African economies diversify their exports, strengthen trade value chains and promote value addition, this facility will contribute to macroeconomic resilience in at least 28 countries.  It will provide financing to more than 100 financial institutions and business organizations and support at least USD 2.8 billion of trade in Africa over a 4-year period.

AfDB’s commitment to the project stems from ,its  ‘AAA’ rating that will enable Afreximbank enhance its trade finance confirmation capabilities, also  to lift its ability to avail medium-term liquidity support to Afreximbank to provide appropriate trade finance to local banks and corporate organizations in Africa, as well as AfDB’s  its demonstrable appetite for Africa risk.

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