AfDB Approves a USD 280 million Trade Finance Package for the African Export Import Bank (Afreximbank)
The Board of Directors of the African Development Bank (AfDB) approved on Wednesday, May 28, 2014 a USD 280 million Trade Finance Package for African Export – Import Bank (Afreximbank). The facility consists of a USD 30 million equity investment, a USD 150 line of credit and a USD 100 million unfunded Risk Participation Agreement (RPA) respectively. This composite facility of capital, liquidity and guarantees will help to expand Afreximbank’s risk bearing capacity and provide medium-term funds for financing various trade transactions and projects across Africa. The facility will enable Afreximbank to increase its visibility as a credible confirming bank for trade transactions originated by African issuing banks. The additional equity investment also demonstrates AfDB’s continued strong support for Afreximbank as a key player in Africa’s trade finance market.
This project is well aligned with AfDB’s core operational priorities of regional integration and private sector development. It will boost intra-Africa trade and 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-adding commodity exports, this facility will contribute to macroeconomic resilience in at least 30 countries. It will provide financing to more than 100 financial institutions and corporates and support at least USD 2.2 million of trade in Africa over a 4-year period, thereby helping to deepen the financial sector and promote private sector development.
AfDB’s additionality in the Project stems from:
- Its ‘AAA’ rating that will enable Afreximbank enhance its trade finance confirmation capabilities;
- Its ability to avail medium-term liquidity support to Afreximbank to provide appropriate trade finance to local banks and corporates in Africa; and
- Its demonstrable appetite for Africa risk.
The African Export Import Bank was established in October 1993 by African Governments, African Development Bank, African private and institutional investors as well as non-African financial institutions and private investors for the purpose of financing, promoting and expanding intra-African and extra-African trade. With an authorized share capital of USD 5 billion, Afreximbank’s mission is to stimulate a consistent expansion, diversification and development of African trade while operating as a first class, profit-oriented, socially responsible financial institution and a centre of excellence in African trade matters.