The African Development Bank Group (AfDB) board has approved a $50 million Trade Finance Unfunded Risk Participation Agreement (RPA) facility with Standard Chartered Bank.
The agreement seeks to boost intra-Africa trade, promote regional integration, and contribute to the reduction of the trade finance gap in Africa, in line with implementation aspirations of the African Continental Free Trade Area (AfCFTA).
Under the deal, the two will share the default risk on a portfolio of eligible trade transactions originated by African Issuing Banks and indemnified by Standard Chartered Bank.
Beneficiaries of this facility are issuing banks in Africa whose ability to grow their trade finance business has been limited by inadequate trade confirmation lines from international banks, as well as Small and Medium-Sized Enterprises (SMEs) and domestic firms who rely on these issuing banks to fulfil their trade finance commitments.
According to AfDB Director for Financial Sector Development, Stefan Nalletamby, this partnership is expected to catalyze more than $600 million in value of trade finance transactions across multi-sectors such as agriculture, manufacturing and energy over the next three years.