AfDB approves $50m to address Africa’s trade Finance

The Board of Directors, African Development Bank (AfDB) has approved 50 million dollars unfunded Risk Participation Agreement for Commerzbank to address Africa’s trade finance market. The bank said this in a statement signed by its Principal Communication Officer, Mrs Olivia Obiang in Abuja.

The bank said the risk participation would leverage Commerzbank support to African issuing banks seeking to expand their trade finance operations. The facility will help address trade finance market demand in key economic sectors such as agriculture and manufacturing. “It will also foster financial sector development, regional integration and boost government revenue generation.’’

The statement also quoted the bank’s Financial Sector Development Director, Stefan Nalletamby as saying “Commerzbank was a strategic partner for implementing the bank’s development mandate.’’ Nalletamby said the intervention would improve market access by African issuing banks, corporate and Small and Medium Enterprises (SMEs). He said most African banks were small and struggle to obtain adequate trade finance facilities from international confirming banks to support African importers and exporters.

Nalletamby said the bank’s addition depended on the use of its “AAA” credit rating to provide comfort to Commerzbank to increase its trade finance exposure to local African banks. “The portfolio of trade transactions support will represent various economic sectors. The facility is thus well aligned with the bank’s strategic priorities, the High 5s that are aimed at transforming Africa.

“The Risk Participation Agreement will run for three years as a 50/50 risk sharing arrangement. Counting rollovers, it is expected that the facility will support approximately 700 million dollars of trade in Africa over the period. This 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.’’ (NAN)