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Trade Finance Program
“Trade finance is an important instrument for influencing Africa's long-term economic development and structural transformation. It can play a cross sectoral role to facilitate delivery of the Bank's, "High 5" strategic priorities to "Power and Light Up Africa", "Feed Africa", "Industrialize Africa", "Integrate Africa" and "Improve the quality of life of the people of Africa.”
Akinwumi A. Adesina,
President of the African Development Bank
The Bank’s involvement in Trade Finance and how the TF Program complements the others Bank activities to support reaching the HI5 objectives.
Africa accounts for circa 3% of global trade and has a lower proportion of intra-regional trade than any other part of the world. The continent remains overly dependent on the export of raw materials, with growth levels fluctuating in line with international commodity prices. To demonstrate the power of trade to the economic transformation of the African continent, if Africa were to increase its share of world trade from 2 to 3 per cent, that 1 percentage point increase would in nominal terms generate about US$70 billion of additional income, which is about three times the total amount of development assistance the continent receives from the rest of the world each year. Progress is being made gradually however, with the recent commencement of free trade under the African Continental Free Trade Area (AfCFTA) on the 1st of January 2021.
As financial markets continue to evolve in response to client needs, emerging country risks, uncertain economic outlooks and changing regulatory environments, the Bank seeks to stay on top of market developments by providing solutions that achieve the desired outcomes. Building on the numerous successes of the TFP and in light of recent market developments, a number of new opportunities have been identified to contribute further to the attainment of the Bank’s ‘High 5’ priority goals and provide more support in LICs and transition states. Our new solution, the Transaction Guarantee instrument, is an unfunded instrument that provides up to 100% non-payment risk cover to Confirming Banks (CBs) for trade finance transactions of eligible Africa-based Issuing Banks (IBs). By covering up to 100% non-payment risk, the TG will enable the Bank to cover low-income countries and transition states, where CBs have limited risk appetite.
Mandate:
- Financing solutions
- Funded and non-funded solutions;
- Equity & quasi-equity investments in trade finance focused entities;
- Partnerships with DFIs and financial institutions.
- Build capacity
- Technical assistance programs that seeks to address skills gap;
- Training and internships opportunities, etc.
- Enhance trade knowledge
- Engaging in knowledge management activities e.g TF survey, Traders Database etc.
- Publications and research activities;
The AfDB’s Trade Finance products, namely Guarantees and Trade Loans include:
| Risk Participation Agreement (RPA) | Click here |
| Trade Finance Line of Credit (TFLOC) | Click here |
| Soft Commodity Finance Facility (SCFF) | Click here |
| Transaction Guarantee (TG) | Click here |