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AfDB and Trade and Development Bank Sign $150M Deal to Enhance Intra-Africa Trade

The Board of Directors of the African Development Bank Group has agreed to an intra-Africa Trade Finance Unfunded Risk Participation Agreement worth $150 million. 

This partnership involves the African Development Bank and Trade & Development Bank (TDB). 

Its aim is to increase intra-Africa trade within Africa, improve regional connections, and narrow the trade finance gap across the continent. This effort aligns with the goals of the African Continental Free Trade Area (AfCFTA).

The African Development Bank will provide a guarantee covering 50% of the risk. In low-income countries and transition states, the guarantee will go up to 75% for transactions.

This arrangement also involves risk-sharing with TDB and extends to various qualifying local and regional banks within the Common Market for Eastern and Southern Africa (COMESA) region. 

These banks actively engage in trade finance activities. Over the next three years, the facility is anticipated to facilitate approximately $1.8 billion in trade transactions.

Also Read: AfDB and Trade and Development Bank Partner to Promote Clean Technologies in Africa

Strengthening Intra-Africa Trade Finance Partnerships

While giving her remarks, Nwabufo Nnenna, the Director General for the Eastern Africa region, African Development Bank Group commented,

“Supporting intra-Africa trade is a key priority for the AfDB. Trade finance is an important driver of economic growth and is critical for cross-border trade particularly in emerging markets,” 

“We are delighted to work with TDB, a strong partner with extensive knowledge and network in Africa, on a shared ambition to support the region’s Trade.”

Admassu Tadesse, TDB Group President and Managing Director, further added,  

“TDB Group is very pleased to continue building on its strategic partnership and fit-for-purpose risk sharing facilities with the AfDB Group.  

“This is to scale up trade finance and other offerings in a region, where there continues to be large gaps in access to trade finance, among others, and where major international banks have been withdrawing and reducing their risk appetite.”

The African Development Bank also provides a three-year trade finance Transaction Guarantee (TG) Facility to local banks. This helps them confirm their trade finance transactions.