AfDB avails $50m to banks’ trade finance operations

THE African Development Bank (AFDB) has approved a $50 million package for Commerzbank AG to support regional banks’ trade finance operations.

The initiative is set to address trade finance market demand in key economic sectors such as agriculture and manufacturing in Africa, said the bank.

“It will also foster financial sector development, regional integration and boost governments revenue generation,” said AfDB.

Commerzbank is a leading international commercial bank with branches and offices in almost 50 countries and offers a comprehensive portfolio of financial services.

“Commerzbank is a strategic partner for implementing the bank’s development mandate.

“This intervention will improve market access by African issuing banks, corporates and SMEs,” AfDB financial sector development director, Stefan Nalletamby, was quoted as saying.

The regional bank also pointed out that most African banks were small hence they struggle to get adequate finance facilities to date.

“Most African banks are small and struggle to obtain adequate trade finance facilities from international banks to support African importers and exporters,” it said.

AfDB said the portfolio of trade transactions supported will represent various economic sectors and the facility is well aligned with the bank’s strategic priorities that are aimed at transforming Africa. The risk participation agreement at hand will run for three years as a 50/50 risk sharing arrangement.

“Counting roll overs, it is expected that the facility will support approximately $700 million of trade in Africa over the period,” it said.

is will be the AfDB’s second risk participation agreement with Commerzbank, a major player in the global trade finance market with a significant Africa footprint.— @thandyfeminine