AfDB approves USD18.15 million to support South Sudan’s membership in the African Trade Insurance Agency and Trade & Development Bank
The African Development Bank Group (AfDB) has approved a US $18.15 million facility to the Government of South Sudan (GRSS), to assist the country with the required resources for its African Trade Insurance (ATI) and Trade & Development Bank (TDB) (formerly known as PTA Bank) membership application. This is a critical step and a prerequisite for the respective institutions to commence their operations within South Sudan.
The approved facility complements other AfDB’s ongoing and planned interventions geared towards building institutions and improving resilience and livelihoods for the South Sudan population by addressing not only the humanitarian crisis and strengthening institutional capacity but also facilitating private sector investments in a fragile environment. In this regard, it is anticipated that joining the TDB and ATI will help South Sudan leverage the limited resources available to the country by mobilizing additional significant resources that can be invested in the importation of essential goods (such as medicines, foodstuff, communication equipment, spare parts etc.), the rehabilitation of basic infrastructure and the strengthening of the productive sector of the country.
The mandate of the TDB is to finance and foster trade, socio-economic development and regional economic integration across its RMCs. It offers a broad range of products and services, across both the private and public sectors, including debt, equity and quasi-equity as well as guarantees. The ATI provides medium to long term credit and political risk insurance, as well as other risk mitigation products to its member countries and related public and private sector actors. These products directly encourage and facilitate foreign direct investment (FDI) as well as private sector investments in a fragile environment and both intra- and extra-African trade through Trade Finance Facilitation. ATI catalyzes private sector investments in infrastructure projects, thereby promoting the economic integration of participating countries into regional markets.
Highlighted by the AfDB as an innovative use of concessionary financing, once membership formalities in ATI and TDB are finalized through the payment of the USD18.15 million, it is expected that South Sudan will benefit, initially from a total investment amount of up to USD 300 million, which will go towards financing various initiatives in the tradable sectors. The catalytic effect of using limited financial resources in this way is undoubtedly huge.
This project is clearly aligned with at least three of the AfDB’s High 5 priorities, namely: (i) Light Up and Power Africa, (ii) Improve the Quality of Life for the People of Africa, and (iii) Feed Africa. The proposed intervention, being a trade finance facilitation initiative supports operations that are cross cutting, multi-sectoral in nature and impact on agribusiness, infrastructure delivery, electricity generation, telecommunications and manufacturing (which by extension promotes industrialization) in line with the priorities mentioned above. Lastly, the programme is informed by a fragility assessment study carried out by the Bank and is well aligned with the Bank’s strategy for addressing fragility and building resilience in Africa.