AfDB Approves USD 150-Million Line of Credit to Afreximbank
Tunis, 19 July 2010 -The Board of Directors of the African Development Bank (AfDB) Group approved on Monday, 19 July 2010 in Tunis, a USD 150-million line of credit to Afreximbank.
This line of credit will be used to finance trade and trade-related projects across the participating states of Afreximbank in Africa. Afreximbank current pipeline is highly diversified in terms of sectors. Trade financed by the bank over the past 5 years also indicates that more than 75% of the approvals were to finance intra and extra-African trade, contributing to improving African economic and trade integration.
Afreximbank currently has an advanced project pipeline of over USD 4.6 billion.
It is anticipated that 26% of the sub-projects that Afreximbank intends to finance will be in the telecommunication sector, while 8% and 7% will be earmarked for energy and transportation, respectively.
Afreximbank plays a very important role as the largest provider of trade and trade-related project finance to support countries in the region, in particular those that have recently come under stress as a result of falling commodity prices, slower export demand, or lower remittances.
For its part, AfDB has also supported these countries by setting up a USD 1.5 billion Emergency Liquidity Facility to provide fast and exceptional support to institutions experiencing liquidity problems and a USD 1 billion Trade Finance Initiative to fulfil a counter-cyclical role providing finance to promote trade where other players have retreated.
The project will sustain jobs directly as well as indirectly through forward and backward linkages along the supply chain. Therefore, this transaction will directly support the development programs of Afreximbank’s participating states, help build their economies and reduce poverty, including in fragile states; as well as contribute to regional integration.
The line of credit is in harmony with the AfDB’s strategy to support African development finance institutions, as it will support national and regional priorities to promote trade, thereby increasing regional member countries’ economic growth and competitiveness and reducing poverty in the continent. It also strongly reflects the Bank’s Private Sector Operations Strategy to deepen support to regional financial intermediaries, reinvigorate strategic partnerships, and promote regional infrastructure.
This facility will further reinforce the partnership between the AfDB and Afreximbank and will promote trade finance in order to boost inter- and intra-regional trade, support the private sector, and enhance productive capacity and the continent’s economic growth.